The future

159 of capitalism
2021

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 159

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The
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How the next generation of business leaders can fix capitalism

to have a more positive impact for all
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Contents #159
REPORT

The future of capitalism

How the next generation of business leaders can fix capitalism
to have a more positive impact for all 8

Global
alternatives
Various takes on capitalism
from around the world 22

This time
is different
More people are waking up
to the fact that our current
economic system isn’t
working; they want to do things
differently, not go back to how
things were before 24
Business must step up
Looking toward a brighter future
The author of Reimagining Capitalism in a World on
Fire quips that, 20 or 30 years down the line, we don’t In the face of so much injustice and inequality,
want to end up saying, “Yes, the planet got destroyed. combined with the threat of climate change,
But for a beautiful moment in time, we created a lot of it’s easy to get discouraged. Yet when I look
value for shareholders” 28 ahead, I see strong grounds for optimism 32

“It boils down “We need “Most of us have

to doing the business leaders been lucky enough
right thing” willing to make to win the lottery
Rebecca a positive ticket of life. What
Henderson impact on have you done for it?
society” What will you
Franz Heukamp do next?”
Paul Polman
 THE BIG PICTURE SMART PICKS
The new drivers of value Can we talk?
When valuing companies, your market With these resources,
comparable may surprise you: a car you’ll never have a reason
company may have more in common to say “no comment” 56
with tech or luxury goods than another
car company 36

HACK
KNOW
Why we need more
female inventors 38
How numbers can
influence behavior 39 Lessons from 9/11:
Operations in times of crisis 60
Keys to a meaningful
By Federico Sabria, Alejandro Lago and
ESG strategy 40
Fred Krawchuk

+IESE
Thinking out
Take a chance, I dare you of the box 70
Eghosa Oriaikhi Mabhena says you may
In conversation with Romain Boulongne
have to pound on the door and not wait
for opportunity to come knocking 42

My better plan for plastic 4 principles to manage

Award-winning Nantek is converting your career for
waste into fuels 46 the long term 74
By Dorie Clark
The best option is a mix of
working virtually and in person
Three experts bust the myths on teleworking 50
FULL STOP
Playing by heart Managing stress
Pianist Ignasi Cambra is upbeat
about the future 54
before it manages you  82
Tips to strengthen resilience,
in yourself and in your teams

“A successful
entrepreneur is
often one who
just tried more
times”
Carlos Uraga
EDITOR’S NOTE

Fish in
troubled waters
F
Antonio Argandoña
Editorial Director of IESE ish spend their lives in water, unconscious of the deterioration of the en-
Business School Insight vironment in which they live until it’s too late. We, too, can move through
AArgandona@iese.edu life oblivious, until someone sounds the alarm on inequality, the climate
crisis, a lack of meaningful job opportunities and unethical corporate de-
cisions. But unlike fish, these problems are of our own making. And also
unlike fish, we can and must deal with them; we have no alternative.

This IESE Business School Insight magazine invites us to reflect on capitalism, an eco-
nomic system that has brought much success and growth, lifting millions out of poverty.
However, recent decades have exposed some unpleasant downsides and put a question
mark over its future. As always, we explore the issues from multiple points of view, re-
flecting different sectors, countries, companies and the people who run them. Solving
the problems confronting the world today requires leadership on three levels: knowing,
doing and being. As one observer notes, people’s values (their character or being) are
increasingly aligned; now they need more knowledge so they can get better at “doing.”
Dean Franz Heukamp, quoting the Pope, sums it up: “We must put human dignity back
at the center, and on that pillar build the alternative social structures we need.”

Speaking of “doing,” elsewhere in this magazine Federico Sabria, Alejandro Lago and
Fred Krawchuk recall how leaders acted in the face of a different challenge – that of
the 9/11 terrorist attacks 20 years ago – to show how we can manage complex, compli-
cated and chaotic situations and eventually reach a state of clarity. Romain Boulongne
shares from his research on how to make ambiguous product offerings clearer for
consumers. And Dorie Clark offers clear tips for managing your career over the long
term. There’s also entrepreneurial advice from concert pianist Ignasi Cambra.

This editorial marks my last as the Editorial Director of IESE Business School Insight,
which resulted from the 2018 merger of IESE Alumni Magazine (which I directed since
1996) and IESE Insight (since 2009). Like IESE itself, our flagship publications have en-
deavored to bring the latest and greatest from business management and the research
and teaching of our faculty to our diverse alumni community and other stakeholders
around the world, in accordance with IESE’s mission: “To develop leaders who strive
to have a deep, positive and lasting impact on people, companies and society through
professional excellence, integrity and spirit of service.”

I can speak with pride about what these publications have contributed, not from my
own personal merit but thanks to a wise editorial board and a formidable team of
editors, writers and contributors over a quarter-century. My thanks go to all of them,
and also to you, the readers, for your continued interest and devotion, and for bringing
that critical spirit we always try to instill in our classrooms. It is my pleasure to hand
over to Joan Enric Ricart, an experienced professor of Strategic Management at IESE:
The magazine, the board and the editorial team are in good hands indeed.
The calamari sandwich will
no longer be the biggest
icon of Madrid

THE NEW IESE CAMPUS IS

COMING

no. 159
157 | IESE Business School Insight | 7
REPORT

How the next

generation of
business leaders
can fix capitalism to
have a more positive
impact for all

The future
capitalism
of
REPORT The future of capitalism

Is the world’s most successful economic system in need of

some work? The short answer is yes. Still, as a time-tested
engine for growth and prosperity, capitalism is worth fixing for
the future. And there’s a surprising amount of agreement by
the next generation of business leaders on how to go about it.

“M
odern capitalism has 22 different nationalities. The students conversed
the potential to lift us with top executives, entrepreneurs, policymakers,
all to unprecedent- activists and academics who connected via Zoom
ed prosperity, but it from Amsterdam, Barcelona, Boston, Delhi, Lon-
is morally bankrupt don, New York, Sao Paulo, Silicon Valley and To-
and on track for tragedy,” development economist kyo, to name a few places. Also prominent in the
Paul Collier wrote in his 2018 book The Future of syllabus were video calls with formerly homeless
Capitalism. A year later, the billionaire investor Ray children in Bangladesh and former child soldiers
Dalio, founder of one of the world’s largest hedge in Uganda – people dramatically affected by the
funds, Bridgewater Associates, wrote: “I believe current system.
that all good things taken to an extreme can be
self-destructive and that everything must evolve Arriving at a moment when we’re still suffering
or die. This is now true for capitalism.” COVID, “one bright side is that we can be connect-
ed anytime and everywhere,” enabling a rich ex-
Reforming, reimagining or regenerating capital- change of many different angles and points of view,
ism: Concerns were being raised long before the noted one of the academic directors, professor
2020 pandemic made even the most committed Tomoyoshi (Tomo) Noda of Shizenkan University.
capitalists join the growing chorus of those call-
ing for serious changes to the world’s dominant
economic system.

Business leaders have their work cut out for them.

As a new generation inherits a system in need of
repair, serious reflections on the future of capi-
talism are required. Rising to this challenge is an
innovative course called, in no uncertain terms,
“The Future of Capitalism,” jointly offered by IESE
Business School and Shizenkan University, Japan,
in cooperation with the School of Inspired Lead-
ership (SOIL), India, and the Getulio Vargas Foun-
dation (FGV), Brazil.

This intercontinental educational journey,

launched amid the COVID-19 crisis in 2021, was
first experienced by 81 MBA students, representing

10 | IESE Business School Insight | no. 159

 It’s not only
a course but
a project for
social change
Tomo Noda
Shizenkan University

This was crucial because, as Noda explained, it’s

“not only a course but a project for social change.”

What is capitalism?
The dictionary definition of capitalism doesn’t
sound like an immediate cause for panic: “an eco-
nomic system characterized by private or corpo-
rate ownership of capital goods, by investments
that are determined by private decision, and by
prices, production and the distribution of goods
that are determined mainly by competition in a
free market.” would argue that point, but some critics point to
the profit motive as being part of the problem.
In a 2013 interview, IESE professor Jordi Canals put More on that later.
it more succinctly: “Capitalism is a combination of
free enterprise, entrepreneurship and free markets.” “It is not from the benevolence of the butcher, the
But then he made an important observation: “Un- brewer or the baker that we expect our dinner,
til the 1960s, we all agreed that capitalism required but from their regard to their own interest,” wrote
ethical rules and that it was at the service of the wider Adam Smith in The Wealth of Nations (1776). Con-
society.” And therein lies the first sign that some- sidered the father of modern economics, Smith
thing has since gone awry. argued that the profit motive could benefit society
at large, a view which powered the first Industrial
In 2015, an International Monetary Fund (IMF) Revolution. As the IMF primer summarized, with
primer highlighted “the motive to make a prof- free-market capitalism, “parties to a voluntary ex-
it” as “the essential feature of capitalism.” Few change transaction have their own interest in the

no. 159 | IESE Business School Insight | 11

REPORT The future of capitalism

We face a new model

of capitalism linked to the
Fourth Industrial Revolution
and digital technologies
outcome, but neither can obtain what he or she come. Now, we face a brand-new model of capi-
wants without addressing what the other wants.” talism linked to the Fourth Industrial Revolution
And “it is this rational self-interest that can lead and, in particular, digital technologies. In Zamag-
to economic prosperity.” ni’s view, “we know a little but not enough” about
the next form that capitalism will take.
Although capitalism pits private or corporate
against state ownership of capital goods, this is The view from Silicon Valley
not to say that governments have no role to play One who has an on-the-ground view of how cap-
in making the capitalist system work efficiently italism is playing out in Silicon Valley is Scott
and effectively. At a minimum, some state regu- Belsky, a youthful entrepreneur, investor and au-
lation is required to avoid exploitation, limit the thor who, after selling his startup to Adobe, is now
power of monopolies and otherwise maintain Adobe’s Chief Product Officer. He describes what
open competition in the coveted “free market.” he sees as both “exciting and increasingly scary.”
Businesses also need a “social license” to operate,
without which they will have a harder time finding On the plus side, Silicon Valley entrepreneurs,
willing customers. with their penchant for disruptive and contrar-
ian thinking, tend to be driven by the pursuit of
Capitalism’s evolution impact rather than purely economic rewards, says
What we think of as capitalism today is constantly Belsky. Making an impact may mean offering solu-
evolving. From a book-lined office in Italy, Stefano tions to society’s biggest challenges, including the
Zamagni, an economics professor and president climate crisis, COVID-19 and social injustice. Dig-
of the Pontifical Academy of Social Sciences, pro- ital platforms and services have made reaching
vides some historical context. a global audience easier than ever before. Belsky

Unlike the older “market economy,” Western capi-

talism emerged relatively recently, toward the end
of the 17th century, with the Agricultural Revolu-
tion. It really caught on during the second half of
the 18th century, during the Industrial Revolution
(Adam Smith’s era), when agricultural capitalism
was replaced with industrial capitalism. Then, in
the 20th century came financial capitalism (aka
“the financialization of the economy”). This is when
the financial sector eclipsed many other sectors
in economic importance – a sign of problems to

12 | IESE Business School Insight | no. 159

 Chris Michel
The future is
both exciting and

credit:
increasingly scary

James Higa
Philanthropic Ventures Foundation
Formerly reported directly to Steve Jobs at Apple

It will take contrarian

thinkers to solve the
problems of capitalism
today

Scott Belsky
Chief Product Officer, Adobe

no. 159 | IESE Business School Insight | 13

REPORT The future of capitalism

also says creativity has become the most prized

contribution at work, replacing productivity,
which is something robots or machines can do. All
this helps to raise more capital, attract more talent
and gain market momentum.

But there are risks to having so much cheap capital

available to throw at yet more tech entrepreneurs

Bas Beentjes/Greenpeace
who famously live by the motto, “Move fast and
break things.” Companies like Facebook, Uber and
Airbnb have pushed the boundaries of existing in-
dustry regulations and found ways to innovate in
gray areas. But it is precisely in those gray areas
where many new problems are emerging, caused
by unrestrained technocapitalists who pride them-
credit:

selves on “seeking forgiveness, not permission,” but

then don’t even ask for forgiveness when confront-
ed with the unintended consequences of their ac-
tions. What about protecting data and privacy? Did
Jennifer Morgan anyone imagine that nefarious actors might exploit
Greenpeace International
these selfsame technologies to have an impact for
bad as well as for good? Foreseeing the downsides
of creative leaps is not a Silicon Valley strength,
Belsky laments.
Creating a better world
Also based in Silicon Valley is James Higa, former
is within our reach, but it Senior Director of the Office of the CEO at Apple
requires global cooperation and now the Executive Director of the Philanthrop-
ic Ventures Foundation. He agrees that many tech
at unprecedented levels entrepreneurs would “rather be pirates than be in

and system change the navy.” But he is optimistic about the promise
of technology put in good hands. From revolution-
izing clean energy to making money itself more
accountable, Higa believes it will take contrarian
thinkers, like those of Silicon Valley, to solve the
problems of capitalism today.

What’s wrong with capitalism?

To paraphrase Winston Churchill, it could be said
that capitalism is the worst economic system ex-
cept for all those other systems that have ever
been tried. With that in mind, here’s a limited
look at just three of the many issues raised in “The

14 | IESE Business School Insight | no. 159

 There are
many problems
Future of Capitalism” course. As many speakers
note, these issues are interconnected in ways that associated with
are hard to separate out.
exaggerated
inequality
Problem 1. It’s unsustainable: We’re in danger
of killing our planet. Case in point: We’ve known
about the environmental harms of extracting and
burning fossil fuels for decades now, but the cur-
rent capitalist system doesn’t seem capable of
doing enough to stop it. (By keeping their stock options invested and taking
out loans to amass more properties, billionaires’
From Amsterdam, Jennifer Morgan, the current tax bills stay scandalously low, as recent investi-
Executive Director of Greenpeace International, gations indicate.)
speaks to this: “One of the most perverse ironies,
which future generations will look back on, is not There are many ethical, economic and social
just that we knew what was causing this climate problems strongly associated with exaggerated
breakdown and we didn’t take immediate action inequality. One is a “near-constant proliferation
to stop it, but that our governments continue to of corporate scandals,” to quote from recent re-
offer incentives and subsidies to the very indus- search by Stephen J. Smulowitz and John Alman-
tries that created the crisis in the first place.” doz titled “Predicting employee wrongdoing: The
complementary effect of CEO option pay and the
She explains that fossil fuels are still attracting pay gap.” In this quantitative study of U.S. banks
three times as much money in investments and from 2007 to 2013, the co-authors find direct ev-
subsidies as green solutions are. “You don’t cut idence that inflated CEO pay was associated with
emissions by bailing out airlines.” negative behaviors of employees in the same firm.
That is to say, cheating and other ethical problems
Unfettered capitalism is extractive and our planet’s are proliferating most where pay gaps are widest.
resources are finite, Morgan stresses. Success, in That is probably because ethical decision-making
capitalistic terms, is measured by growth which is gets replaced with “what’s in it for me,” as feelings
not sustainable. The system has encouraged con- of unfairness and envy rise. This was found espe-
sumption beyond our planetary constraints. cially when CEO option pay was high, which could
be an indication that the CEO’s attention becomes
Problem 2. It’s rigged: Winners take almost all. focused more on the stock price than on the com-
Evidence abounds that the easiest way to make pany’s control systems. The research highlights
a fortune these days is to start with one. For one that executive pay can influence wrongdoing both
angle on the problem, look at CEO pay over re- in terms of incentives as well as social comparison.
cent years. In order to align CEOs’ incentives
with shareholders’, much of CEOs’ compensa- Negative feedback loops that exacerbate in-
tion has come in the form of stock options. With equality threaten our social fabric. Ray Dalio
the stock market soaring – stoked recently by writes: “The pursuit of profit is … now producing
COVID-19 rescue packages – CEOs in particular a self-reinforcing feedback loop that widens the
have amassed staggering amounts of wealth, and income/wealth/opportunity gap to the point that
many pay shockingly little in the way of taxes. capitalism… (is) in jeopardy.” In a widely shared

no. 159 | IESE Business School Insight | 15

REPORT The future of capitalism

post, Dalio observes that resources are being Consider affordable healthcare. This is a par-
shifted to “what the haves want relative to what ticular problem in the United States, the setting
the have-nots want, which includes fundamentally for a growing number of “deaths of despair.”
required things like good care and education for The phrase was made famous by economists
the have-not children.” Anne Case and Nobel prizewinner Angus Dea-
ton, authors of Deaths of Despair and the Future
Problem 3. GDP growth is emphasized at the ex- of Capitalism. The world’s richest country (mea-
pense of our wellbeing. In most places, GDP car- sured by GDP, of course) has some of the world’s
ries more weight than Gross National Happiness, highest priced and hardest to access health-
or wellbeing, as is measured in Bhutan. As Zamag- care, which actually contributes to its GDP but
ni says, capitalism as we have it now is “great at not to its citizens’ wellbeing. Life expectancy in
growth but not great for development.” In other the United States has been declining due to opioid
words, capitalism isn’t aimed at making sure that abuse, suicides and other acts of self-destruction.
human beings flourish. And by human flourishing,
we’re talking about basics like education, health- Case and Deaton’s work has sparked new research
care, a just legal system, a healthy environment lines – for example, “Housing wealth, health and
and other foundations necessary for supporting deaths of despair” by UCLA’s Ariadna Jou and
the common good. IESE’s Nuria Mas and Carles Vergara, which links
wealth and health outcomes.

So what’s the solution?

As a social project, “The Future of Capitalism”
course aims to arm its students with inspiration
for a better future. Speakers emphasize solutions
on many different levels – global, systemic, na-
tional, organizational, local/communal and famil-
ial/personal.

global / system - level change . “Creating a bet-

ter world – one that’s greener, safer, happier and
healthier – is within our reach, but it requires
global cooperation at unprecedented levels,” says
Greenpeace’s Morgan. “And it does require system
change, not half-baked tweaks here and there. It re-
quires new rules, new investments, not saving the
old failed system via adaptation or reform. Without
fundamental changes in trade or finance rules, for
example, there can be no just economic recovery.”

In Morgan’s view, working within the current cap-

italist system has blinded us to any alternatives.
The COVID-19 crisis “might just be the opening we
Watch it
Raise your consciousness of capitalism’s collateral damage with these
documentaries and a drama, widely available in multiple languages.

Saving Capitalism Inside Job

2017: 73 minutes 2010: 108 minutes
“We are a two-tiered Was the 2008 financial
society composed of a few crisis an “inside job,” as this
winners and a larger group hard-hitting documentary’s
of Americans left behind,” title suggests? Interviews
says Robert Reich, former with some of those wielding
U.S. labor secretary and power and close observers
a professor at the University of California at help make a powerful case. In the words of
Berkeley. Inspired by Reich’s 2015 book of the its director, this film is about “the systemic
same name, this Netflix documentary follows corruption of the United States by the financial
the author as he talks mostly to those left services industry and the consequences of
behind. “In the richest country in the history of that systemic corruption.” Unfortunately, unlike
the world, nobody should be working and not in a Hollywood movie, the alleged bad guys get
making it,” he states. “The game is rigged.” away with it all.

An Inconvenient Blood Diamond

Sequel: Truth to Power 2006: 143 minutes
2017: 99 minutes A fictional rendering of
A decade after An the horrors of the trade in
Inconvenient Truth (2006) blood or conflict diamonds,
raised public awareness including the plight of a boy
about climate change, this forced into service as a rebel
follow-up continues former soldier. Set in Sierra Leone
U.S. vice president Al Gore’s mission to save amid its civil war in the late 1990s, the film stars
Planet Earth. The good news is the 2016 Leonardo DiCaprio as a rogue gem smuggler
signing of the Paris climate agreement. The who finds himself caught up in the saga of a
bad news is there’s much more to be done. family pulled apart by forces that value stones
“The next generation would be justified in as more precious than human lives.
looking back at us and asking, ‘What were you
thinking? Couldn’t you hear what the scientists
were saying? Couldn’t you hear what Mother
Nature was screaming at you?’”

no. 159 | IESE Business School Insight | 17

REPORT The future of capitalism

need to allow alternative socioeconomic models the lowest corporate tax rates and then registering
that have reemerged over the last decade to take themselves for tax purposes there; instead, those
off and then take over,” she says. Without advocat- multinationals will be taxed at a minimum global
ing one particular model, Morgan points to sever- profit tax rate of 15% not in their country of res-
al sources of inspiration, including the wellbeing idence but in their place of sale. In the words of
economy (advocated by the Wellbeing Economy French Finance Minister Bruno Le Maire, this will
Alliance); the principles of the People’s Sustain- “put an end to the race to the bottom.” Big Tech
ability Treaty (advocated by the Radical Ecolog- multinationals that now allegedly evade taxes (fin-
ical Democracy Network); the social solidarity gers point at Amazon and Facebook) are the most
economy (advocated by Réseau intercontinental likely to be affected. Governments can use the ex-
de promotion de l’économie sociale solidaire); and tra monies raised to fund development goals.
the doughnut economy, a model in which regener-
ative and distributive economic activity is carried Systemic changes can also include new measure-
out within the bands of an “ecological ceiling” and ments, mindsets, responsibilities and a shift from
a “social foundation” (the name comes from its a shareholder to a stakeholder focus in businesses
doughnut-shaped visual framework). across borders. See Global alternatives for a snapshot
of how capitalism finds distinct expressions around
Can change occur within what we know of as the world, to help expand your thinking beyond your
modern capitalism, even at an international level? own social, cultural and political understanding.
There’s evidence that it can. For instance, in July
2021, 130 countries and jurisdictions, representing organizational change. Drilling down, “firms are
more than 90% of global GDP, joined forces to es- at the core of capitalism,” writes Paul Collier. “The
tablish a new framework for international corpo- mass contempt in which capitalism is held – as
rate tax reform. This will prevent multinationals greedy, selfish, corrupt – is largely due to (firms’)
from shopping around to find the countries with deteriorating behavior.” He continues: “If there is

I love the notion of

the leader as a social
architect, convening
the right people
around the right
questions

Anil Sachdev
School of Inspired Leadership (SOIL)

18 | IESE Business School Insight | no. 159

 The next
one feature of modern capitalism that people find
most repellent, it is this obsession with making

generation
profits.” How can companies pull themselves out
of their profit-obsessed spiral?

“Companies need a social license to operate,” em-

phasizes Francesco Vanni d’Archirafi, former CEO seems well
of Citi Holdings and an active philanthropist now
based in London. Taking care of stakeholders, not positioned
to utilize the
just shareholders, is paramount for long-term
success, and Vanni d’Archirafi sees this being in-

tools more
creasingly recognized in the financial industry and
beyond. “Environmental, Social and Governance
(ESG) criteria and the Sustainable Development
Goals are now on the top of everyone’s business
agenda,” he says, adding that more and more firms responsibly
than the last
are embracing a new ethos: “We want to leave the
world a better place than we found it.”

At the organizational level, “purpose should be

at the center of corporate governance,” argues
IESE’s Jordi Canals. “It defines a clear reason why
a company exists, sets some standards of corpo-
rate effectiveness and value creation, focuses the other digital platforms as a means for positive
organization on the long term, and helps align the change. When it comes to attracting the best
interests of the different stakeholders.” See inter- global talent and giving voice to the previously
views with Paul Polman, Nitin Nohria and Rebecca voiceless, they believe digital platforms can help
Henderson who elaborate on these themes. level the playing field. And, as digital natives,
the next generation of business leaders seems
personal change. Recognizing the power of busi- well-positioned to utilize the tools more respon-
ness as a potential force for good is also recogniz- sibly than the last.
ing the power of the business leader on an individ-
ual level. At the individual level, how does change An audacious idea that emerged from the class
come about? discussion is to embed digital money with more
meaning and provenance. A new money could be
In “The Future of Capitalism” course, tomorrow’s more transparent, so leaders and their businesses
business leaders shared their own visions of cap- could align it with their missions. Imagine: What
italism for the next decade. There were many if monetary tokens contained a trove of valu-
common threads in their presentations, as they able information regarding supply chains, such
recognized the power of long-term thinking and as whether fair-trade and sustainable practices
measures aligned with wellbeing and sustainabil- were adhered to? For a generation that is used to
ity. See the Checklist for change. mobile transfer services such as M-Pesa, not to
mention cryptocurrencies, encoding such infor-
Notably, the students’ visions of the future are mation into money itself to increase transparency
optimistic about the power of social media and isn’t a big leap.

no. 159 | IESE Business School Insight | 19

REPORT The future of capitalism

Checklist
In this idea and its implementation, personal
choices, business leadership, organizational com-
mitments and system-change overlap, as they so
for change
often do. Individual responsibility adds up, inspir-
ing business and even systemic change at the top.

Change metrics to measure what

“I love the notion of the leader as a social archi-
you treasure
tect,” says Anil Sachdev of the School of Inspired
Leadership, “convening the right people around
Instead of fixating on the financial return for
the right questions. So keep asking those ques- shareholders, use Environmental, Social and
tions. Don’t let your schooling interfere with your Governance (ESG) metrics and the U.N.’s 17
education,” he told the MBA students. “We’re on a Sustainable Development Goals (SDGs) as
quest: What is capitalism about? What is business measures of success, taking stakeholders
about? In what way are we making a difference to into account.
each other and to our collective dreams, hopes
and aspirations? How are we living the highest Report in alignment with the
within ourselves at our workplaces, so that busi- recommendations of the Taskforce on
ness can become a true platform for doing more
Climate-related Financial Disclosures (TCFD)
if you are a public company or a larger private
good, rather than what it is today?”
firm. (While there are other sustainability-
disclosure standards, the TCFD is currently
As the course leaders pointed out, capitalism is
the most widely used and therefore on track
not a law of physics; it’s a manmade system of to become the global standard.)
commerce and trade that came into practice 400
years ago and which reflects each generation’s Emphasize longer term results over quarterly
values and priorities. And just like governments, financial returns. Half-yearly reports of
empires and dynasties throughout history, its le- results are sufficient to stay transparent
gitimacy lasts as long as it is aligned with human to stakeholders (following the European
values, serving all our needs. Commission’s requirements) and forecasts
can look ahead several years.

Align business metrics and language with

broader, multilateral goals – like the EU Green
Deal and the SDGs – to help expand their
positive impact.

Remember the limitations of GDP, which

records prices paid, not value created,
whenever reading the news, deciding
The next edition of “The Future of Capitalism” will take where to invest or otherwise informing your
place in 2022, with the aim of opening up the course to
more participating schools, thus increasing its impact.
business decisions.
The objective is to convert the course into a global
platform where around 300 students from 30 business
schools, together with other supporters from the
world of business, can join for the 2024 edition.

20 | IESE Business School Insight | no. 159

To rebalance capitalism, consider adding these items to your agenda. The list comes
from suggestions presented in “The Future of Capitalism” course – including from the
top two MBA teams’ presentations, bringing together their perspectives from Brazil,
China, India, Japan, the Netherlands, Peru, Spain, the United States and Zimbabwe.

Run your business with the big picture Rethink your relationship
in mind with money

For top management, pay moderate salaries Think of money primarily as a medium of
to avoid upping the ante in your industry. exchange, not as a goal in its own right.
Money works best for the common good
For entry-level staff, provide a living wage, when it’s circulating.
above and beyond the regulated minimum wage.
Consider ways to add more information to
Design your corporate strategy, business money using technology. ESG information
model, R&D and investment practices with about supply chains and trade practices,
sustainability and the common good in mind. for example, could make money itself more
transparent as it circulates.
Work to win, or win back, trust in the systems
and institutions that you are part of.
Be an activist with system-change
in mind
Put purpose at the center of business
Work your own circle of influence: Which
Help people within your organization feel part people are hostile to change? Which ones
of the mission, connecting with stakeholders. are open to change? Which ones are already
making changes? Focus on the middle group:
Align incentives with corporate purpose.
Those are the ones who can be shifted. And
Embed ethics in everything, including in the as the balance tips, the rest will have to join
design of algorithms and financial reporting. so as not to get left behind.
This may involve creating new positions for “AI
ethicists” or “financial ethicists,” for example. Resist denialism and pessimism: “Nothing will
ever change” is an argument for maintaining
the status quo. To combat this, find a debate
Invest in people’s wellbeing or an issue that’s personal to you and get
involved, starting at the local level and then
Recruit talent from a diverse pool of appli- broadening out. Become a vocal advocate
cants, and work for inclusion and equality. for the change(s) you seek, until the voluntary
action becomes a new corporate value.
Allow flexible work arrangements.

Listen, empathize and build trust when work-

ing with people online or off.

no. 159 | IESE Business School Insight | 21

REPORT The future of capitalism

GLOBAL
ALTERNATIVES
Many of the crises in capitalism stem from how it is
practiced in the Global North, with consequences
felt in the Global South. Here we present different
takes on capitalism from around the world.

BRAZIL AFRICA
The Amazon rainforest – our planet’s air conditioner “I am because we are.” So the concept of ubuntu
– is now emitting more CO2 than it is able to absorb, goes. Although hard to generalize about such a
owing to fires and deforestation, often done deliber- grand continent, collectivism with an emphasis on
ately to clear the way for more arable land to produce pulling together is a common thread (known as
more exportable goods. The loosening up of environ- harambee in Kenya). For many Africans, capitalism
mental controls is in line with the drive to liberalize the has negative connotations related to colonialism and
economy. Traditionally, Brazil has had strong social globalization, both of which have tended to exploit
policies targeting poverty and inequality, including the continent’s resources. Although some early
making direct cash transfers to struggling families so postcolonial leaders, such as Ghana’s Kwame Nk-
children don’t have to choose between going to school rumah, considered capitalism part of the problem,
and having to work. But progress is threatened by many of today’s leaders recognize that the private
populist, nationalist political tendencies, making institu- sector can and must play a leading role in the conti-
tional reforms more urgent than ever. There are some nent’s development. But a better form of capitalism
grassroots movements to guarantee food sovereignty, for the context would reflect African values – a
giving communities, rather than corporations, control so-called Africapitalism that promotes shared value
over the way food is produced, traded and consumed; creation for local stakeholders to ensure that more
indeed, Ecuador has enshrined as much in its Consti- of the benefits remain in Africa. The Tony Elumelu
tution. “We cannot keep doing what we have been do- Foundation in Nigeria, for example, has pledged
ing,” notes FGV economist Carlos Ivan Simonsen Leal. $100 million over 10 years to help homegrown SMEs;
“It’s crucial to fight against corruption and rebuild trust, aiming to empower 10,000 entrepreneurs by 2025,
without which there can be no healthy capitalism.” over 9,000 have been helped to date.

22 | IESE Business School Insight | no. 159

 JAPAN
It’s fitting that in 2024 the new 10,000 yen note will
feature Eiichi Shibusawa (1840-1931), responsible for
Japan’s first bank. Known as the father of Japanese
capitalism, his vision was closer to what we might
call stakeholder capitalism today. He felt the fruits
of labor should be reinvested back into society. For
him, the Analects (the teachings of Confucius) were
inseparable from the abacus (symbolizing money),
meaning economics had to have a moral dimension;
indeed, he wrote a book on the subject, Rongo to
Soroban (The Analects and the Abacus). Apart from
Confucian ethics, the other philosophy that influenc-
es Japanese capitalism is Shintoism, or Kami no
michi, meaning “the way of those above.” This
stresses the importance of people living in harmony
with their environment, contributing to maintaining
the unity and integrity of the nation. As Shibusawa
believed, the point of business is not to accumulate
wealth but to bring greater wealth to the nation and
the people.

INDIA
2022 marks 80 years since Gandhi launched the business is to improve the quality of life of people, plow-
movement to end British colonial rule in India. One of ing part of the profits back into society and contributing
its hallmarks was nonviolence, a tradition dating back to nation-building. This was one of the founding princi-
to the ancient Indian sage Patanjali (200-150 B.C.) ples of Tata in 1868, which instituted an 8-hour workday,
who identified nonviolence as a key leadership virtue. free healthcare and maternity leave long before these
Violence is not just physical but can be wrought through existed in national law. Tata has a unique ownership
systems that subjugate and exploit others. Recognizing structure, with two-thirds of the equity share capital
this, Indian philosophy has a strong ethos of serving the held in public philanthropic trusts that can only be spent
wellbeing of all. Which leads Ravi Chaudhry, a thought on social and community development. Muthuraman
leader in India, to ask: Why don’t we, as a society, believes taking care of workers and going beyond the
change metrics to motivate and reward this kind of minimum required by law is more than possible, it’s
healthy ethos? ultimately profitable. “I would put forward that you can
be profitable, grow and satisfy the shareholders while
B. Muthuraman, who worked nearly 50 years for India’s simultaneously satisfying society, doing good and being
famous Tata Group, explains that the purpose of environmentally friendly.”

source: Based on comments shared during the sessions “Capitalism and International Conflicts,” “Inconvenient Truth Continues,”
“Trust: Sine Qua Non of Capitalism” and “Eastern Philosophies,” delivered between February and April 2021 as part of “The Future of Capitalism” course.

no. 159 | IESE Business School Insight | 23

REPORT The future of capitalism

Nitin Nohria
Dean of Harvard Business
School (2010-2020). Harvard
University Distinguished
Service Professor

This time is
different
“I
believe capitalism is still the best engine
to create prosperity in the world. The big-
gest reason to reimagine capitalism is that After a decade as CEO of Unilever, Polman now uses his
if we don’t fix it, then we will all be worse voice and influence to galvanize industry leaders to trans-
off.” So says Nitin Nohria, speaking on a form the way business is done and advance the U.N. Global
panel alongside Paul Polman, who concurs with Nohria’s Goals, which he helped to develop. Similarly, after a decade
assessment: “I’m not so much worried about capitalism as dean of Harvard Business School, Nohria is now reflecting
as a concept; I’m more concerned with how we bend the and speaking on the education of business leaders to prepare
curve of capitalism to make it more sustainable, more in- them for the challenges ahead. The issues are big, which is
clusive and more functional for generations to come.” why, they say, we need a new type of leader.

24 | IESE Business School Insight | no. 159

What’s gone wrong?
PP: Our economic system was failing even before the pan-
demic: people left behind, growing inequality and debt for
future generations. COVID-19 amplified all that. The finan-
cial toll, combined with the trillions spent to deal with the
crisis, has made people realize that the costs we are incur-
ring are significantly higher than if we had just made the
right decisions and invested in the right things that would
have avoided these issues in the first place.

NN: After every crisis, whether the 2008 financial crisis or

COVID-19, we keep seeing a K-shaped recovery, where the
rich get richer and the poor get poorer. More generally, our
economies are structurally becoming more K-shaped. We
have to find a way to change that. Support for capitalism and
democracy – the two great engines of the Enlightenment –
comes when capitalism and democracy create shared pros-
perity. I don’t think society cares so much about inequality of
outcomes as long as everyone is doing better overall. People
start to become anxious about inequality if one group keeps
doing worse while another group consistently does better. If
you have structural rigidities that repeatedly determine who
does worse and who does better – which is the world we’re
in – that’s when you lose trust in the systems and institutions
that have served us until now.

Are there signs of change?

PP: More and more people are waking up to the fact that our
current economic system isn’t working, and they’re demand-
ing more from their governments and from companies. Polls
of CEOs show that the vast majority want to come out of this
crisis better and do things differently, not simply go back to
how things were before. This is different from what happened
after the 2008 global financial crisis, when we didn’t learn the
lessons and didn’t take the necessary actions. Back then it
was felt that banks were too big to fail but people were too
small to matter. This time I think it’s different. We’re seeing
some tipping points, such as financial markets waking up to
environmental, social and governance (ESG) standards. We Paul Polman
see companies operating under a multistakeholder, longer U.N.-appointed Sustainable Development Goals
term economic model, with purpose at the core, and those advocate. CEO of Unilever (2009-2019).
Author of Net positive: How courageous
companies are performing better. Governments are redefin-
companies thrive by giving more than they take
ing social contracts on everything from healthcare to social
(Harvard Business Review Press, 2021).
safety nets and just transitions, just like FDR did with the New
Deal after the Great Depression when the U.S. introduced
social security and more inclusive economic growth. We’re
trying to decarbonize our economies. We’re trying to make the

no. 159 | IESE Business School Insight | 25

REPORT The future of capitalism

financial markets subservient to the real economy, not the action. While the State might still be the best entity for col-
other way around. We’re starting to make the U-bend in lective action, it depends on effective government, and that’s
the history of humanity in our economic models. not what we see in most countries today. As a pragmatist, I
see more progress being made through private citizens and
So it’s all good news? private entities taking collective action themselves.
PP: There’s no time for celebration yet! Many promises have
been made but the speed and scale at which we’re moving PP: Given that the issues are so big, and governments’ ability
isn’t enough. Whenever you try to make system changes, the to work together and look long term is limited, here is where
current system pushes back. There are still lots of vested in- I think businesses have a role to play. Responsible businesses
terests and bottlenecks to solve. need to step up and fill the void. They cannot just myopically
focus on their own organization; they cannot be bystanders
Does it make sense to work through the system then, or in the system that gives them life. They have to become part
go around it? of these broader system changes that are needed.
NN: Throughout human history, there has been a tension
between individual and collective action. We used to believe NN: I feel the approach of a company not acting alone but
the locus of individual action was the private sector and that working with and through other partners – getting other
collective action lied with the State: That was how we coordi- people in an industry to act together and commit together
nated action, with the State creating the policies, structures, to a higher set of standards – is the way in which we can
incentives and legislation to enable and constrain individual start to rebuild social confidence. I don’t think people are
that confident in any one government or in any one firm
solving these problems for us. In the same way as we cre-
ated government multilateral institutions, we need to cre-
ate private multilateral institutions that build confidence
in society, so that when we commit to collective action, we
actually do it.

Are business leaders ready for this?

PP: It takes moral leadership, willpower and courage. As rep-
resentatives of our organizations, we need to be strong advo-
cates in making sure all the stimulus money coming into the
global economy is spent right. We need to start measuring
what we treasure – not just measuring ROI but measuring
returns on environmental and social capital. We certainly
need more courageous leaders, those who put others’ inter-
ests ahead of their own. Do you care? Courage comes from
the French word coeur, meaning heart. We need leaders who
work not only with their heads but with their hearts, who first
and foremost are good human beings, with empathy, com-
passion, humility and humanity. These are the words to de-
scribe the leaders of the future. Leaders who can think mul-
tigenerationally. Leaders who are system thinkers and can
wrap their arms around complexity, distill it to simplicity
and take action. Leaders who understand the power of part-
nership for the common good.

26 | IESE Business School Insight | no. 159

Are business schools preparing these kinds
of leaders?
PP: Milton Friedman’s myopic view of shareholder
primacy is still the basic premise of most business
school education. If we don’t change the core of
our business education, we won’t change the core
of our business leadership.

NN: You can think of the education of leaders as

knowing, doing and being. Knowing is amassing a
body of knowledge. Doing is applying that body of
knowledge in a rigorous, disciplined way. And being
is the character of the person doing it: What’s the
identity you carry as a business leader? Over the past
100 years, business education has done a great job of advancing need to instill a sense of purpose for people and the planet
knowing, a less good job at translating that knowing into doing, in those who will be the leaders of tomorrow.
and an even worse job at translating doing into being.
NN: One of the most exciting experiments I’ve seen is a com-
However, over the past 10 years, I think that has flipped. We puter science course that includes something called embedded
now have a generation of people for whom the being – the ethics. Someone from the philosophy department participates
values they want to express in business – has become clearer. in every class and pushes the students to think about the loss
The problem now is that we’re unsure how to arm them with of privacy that results from network effects or the biases that
knowing and doing. result from AI algorithms and other ethical issues that they
might otherwise consider only superficially. These experts in
The quality movement provides an object lesson for us. For a ethics help create a much richer conversation about the inter-
long time, people had good intentions about producing quality action between technology and society than if the computer
but it took lean manufacturing – a whole system of ideas about science faculty member had asked similar questions. Generally,
production – to make that aspiration into a worldwide practice business schools have done a better job at embedding STEM in
that everyone can rely upon. I think we need to do the same their curriculum – bringing in more technology, more machine
on the environment, living wages, and so on. We can teach dis- learning, more data analytics – but a less good job at embed-
counted cash flow, but how do we teach how to calculate envi- ding ethics and humanities and making those a core part of the
ronmental impacts in a way that is equally rigorous? What are business education. We need to encourage more of that.
the best models? We need to get much better at arming this
generation of people who have their values in the right place Any final thoughts?
with the knowledge and tools they need to act on their values. PP: Never in history have we been so forewarned and never
have we been so forearmed with the tools to do something
What else needs to change? about it. Most of us have been lucky enough to win the lot-
PP: Rankings: As long as we continue to rank business tery ticket of life: We have financial and intellectual free-
schools on the basis of salaries, banking and consulting will dom, we can choose the job we want, we’re in privileged
be the primary focus of most students, and Milton Friedman positions that only 5% of the world’s population are lucky
will prevail. Schools need to take the Sustainable Develop- enough to have. So I ask: What have you done for it? What
ment Goals as their template and make them the core of will you do next? My challenge is simple: If you belong to
their curriculum. They need to combine STEM subjects with the 5%, then put yourself in the service of others and live
the Humanities to be able to solve real-world problems. We your life with purpose.

no. 159 | IESE Business School Insight | 27

REPORT The future of capitalism

Xxxxv Xxxx
credit :

Rebecca Henderson
John and Natty McArthur University Professor at
Harvard Business School and author of Reimagining
Capitalism in a World on Fire (2020)

www.rebeccahenderson.com

28 | IESE Business School Insight | no. 159

 Business
must
step up
R
ebecca Henderson is a firm believer in capi-
talism’s capacity to lift millions out of poverty
and spread freedom, innovation and prosperity
around the world. However, against the pres-
ent-day backdrop of immense environmental
degradation, burgeoning inequality, rising populism and ex-
tensive social unrest, she believes the time has come to re-
imagine capitalism, with purpose-driven firms at the helm.

Surely the purpose of the corporation is to make money?

Well, yes, but what we really want are firms that are authen-
tically committed to a purpose beyond profit maximization.
That is what we mean by purpose-driven firms. To paraphrase
Colin Mayer (Saïd Business School professor at the University
of Oxford), purpose is about solving problems in ways that are
profitable but without causing new problems. Purpose is not
at odds with financial returns; rather, avenues exist for what
my Harvard Business School colleagues, Michael Porter and
Mark Kramer, term “shared value opportunity.” This essential-
ly entails solving large social problems while making money
at the same time.

Are there not some problems, such as climate change, that

are simply too big for business to solve?
Some might argue that colossal events, such as climate
change, are public-goods problems and, as such, need to
be addressed by government. Indeed, as a collective-action

no. 159 | IESE Business School Insight | 29

REPORT The future of capitalism

dilemma, government may need to take the lead. But global But markets only work their magic when prices reflect real
business still has a critical role to play in driving system- costs – “real” being the operative word. We have seen nu-
ic change, since companies are uniquely poised to create merous cases where profits are maximized to the detriment
shared value, rewire finance and build cooperation. of global health and social welfare. For example, coal-fired
electricity is only so cheap because companies are not paying
In the case of climate, for example, it’s increasingly clear that for the harm it causes – billions in healthcare costs and the
in many industries there is a business case for addressing deaths of hundreds of thousands of people, not to mention
climate change at multibillion-dollar scales. Walmart is one the lasting damage to the environment. Generating $10 worth
example: They took a billion dollars in incremental profit to of coal-fired electricity costs at least $8 to human health and
their bottom line after rejigging the efficiency of their trucking another $8 for the environment – costs that are not being
fleet and significantly reducing their energy and greenhouse factored into the bottom lines, but instead are being footed
gas emissions. Another example is Tesla’s Elon Musk, whose by society. And that is hardly fair.
focus on electric vehicles has almost certainly accelerated the
transformation of the world’s automotive industry by five or Just as unfair are the enormous hidden costs of burning oil
six years, while simultaneously building one of the world’s and gas, and of eating red meat. Those trying to build a clean
most valuable automotive companies. economy have to compete with other firms whose destruction
of our health and our environment is being heavily subsidized.
Although the individual actions of these forerunning firms
aren’t yet enough to move the needle, they are undeniably a In these kinds of cases, the government needs to take action
step in the right direction. They inspire positive change for to change the rules of the game and price these externalities.
companies, both inside and outside their industries, especial- After all, it is not a free market if firms can lobby govern-
ly those in the midst of transformation, like electric power, ments and fix the rules to their own advantage. They need to
transportation, agriculture and construction. Once one firm be counterbalanced by democratically elected, transparent,
steps up and shows there is money to be made, other firms accountable and capable governments able to prevent com-
make the leap. panies from generating massive negative externalities that
degrade environmental, educational and healthcare systems.
But can we trust companies to innovate and self-regulate That’s the second necessary condition.
when their bottom lines demand otherwise?
No, we can’t! We know from the fields of political science and Equally, there is the need for a third key component: a strong
developmental economics that prosperous societies rest on civil society to guarantee the rule of law, a thriving democracy
three foundations. The first is genuinely free markets, which and a free press.
are at the heart of freedom and prosperity.
However, in a context of extensive global unrest and institu-
tions under stress, to preserve the legitimacy of capitalism, we
need a fourth thing: Business must also step up.

“Economic What is the incentive for firms to address such externalities

incentives aside,
and become purpose-driven?
Research conducted over the past 20 years finds that pur-

it boils down to
pose-driven firms reach higher levels of corporate perfor-
mance, as defined by financial results, innovation and pro-

doing the
ductivity. All the data suggest that business, as a whole, has a
deep economic interest in solving complex social issues like

right thing”
climate change, racial exclusion and inequality. Economic
growth is stronger and more sustainable in societies with
strong, democratically accountable governments that provide
a solid framework to enable profit maximization to thrive.

30 | IESE Business School Insight | no. 159

 Rebecca Henderson’s
four pillars of change
Unfortunately, sustaining voluntary self-regulation is nearly
impossible at a global level, which is why a comprehensive ap-
proach is needed. The system must espouse a long-term per- 1. Build a business that can set
spective, offer solid economic incentives for cooperation, mon- the right price and still be
itor corporate behavior and sanction firms that don’t comply. profitable.

Economic incentives aside, it boils down to doing the right 2. Persuade your competitors
thing. A popular political cartoon captured it well: 20 or 30 to do the same.
years down the line, we don’t want to end up saying, “Yes, the
3. Make sure that investors
planet got destroyed. But for a beautiful moment in time, we
understand there is
created a lot of value for shareholders.”
money to be made.
Doesn’t this create a conflict with shareholders? 4. Push governments to
Investors have an interest in enforcing action to resolve large put the right price into
social and environmental problems for two main reasons. law, so that bottom
feeders can’t survive.
First, investors, particularly very large ones, cannot diversify
away from major systemic risks like climate change or political
instability. Increasingly, there’s a recognition that environ-
mental degradation is responsible for massive floods, wildfires
and the very real collapse of agricultural systems in vulnerable
countries. It’s not going to be good for investors if there is
stress on the food supply or mass displacements of people. I think investors are waking up to the potential of that. And
And it’s going to be hard to make money if most people be- where they go, more will follow, not just in terms of other
lieve the rich are trashing the planet in their own interest. companies wanting to get in on the action, but also in terms
of the best talent gravitating toward those areas.
Already we are seeing declining trust in elites on both the
left and the right and a move toward populism, especially in You mean these big problems could offer a roadmap to
the developed world, where much recent growth has been growth and talent engagement?
concentrated at the top end of the income distribution and Absolutely. Both millennials and baby boomers are increas-
where social mobility has been falling consistently, to the ingly demanding that their work have meaning, and compa-
point where the average U.S. adult statistically cannot expect nies are starting to talk about purpose as a talent attraction
their children to do better than them. strategy. Nearly 90% of managers say a company with shared
purpose will have greater employee satisfaction. New research
The smart investors have realized that companies need to in economics and psychology is highlighting the role of pur-
serve a social purpose or eventually we are not going to have pose in intrinsic motivation, as opposed to the traditional
a society or an environment in which to make money. Even carrot-and-stick approach. If a firm is purpose-driven, it is
BlackRock’s Larry Fink has said that companies must ben- more likely to attract employees who want to have an identity
efit all of their stakeholders, which, considering who he is, as someone who does the right thing.
is significant.

Second, caring about these issues is, in fact, incredibly strate-

Rebecca Henderson spoke on the Purpose of the Corporation as part of
gic. Consumers want sustainable products and are increasing-
the IESE-ECGI Corporate Governance Conference held in October 2020.
ly willing to use their consumer power against toxic brands. The next conference organized by the IESE Center for Corporate
Particularly in industries where there is pressure on resourc- Governance (IESE CCG) and the European Corporate Governance
Institute (ECGI) will take place on October 4-5, 2021, on the role of the
es – in waste reduction and decarbonization, for example – board in corporate strategy in an uncertain business environment.
there are huge opportunities and fortunes to be made, and Contact ieseccgconference@iese.edu.

no. 159 | IESE Business School Insight | 31

REPORT The future of capitalism

Franz Heukamp
Dean of IESE Business School
One of the driving forces, with Tomo Noda of Shizenkan
University, behind “The Future of Capitalism” course.

Looking
toward a
brighter
future

32 | IESE Business School Insight | no. 159

I
n the face of so much injustice and
inequality around the world, combined
with the looming threat of climate change,
it’s easy to get discouraged about the
future. Yet when I look ahead, I see strong
grounds for optimism.

There’s a groundswell of discontent over systemic problems that have resulted in

some dysfunctional business practices, the consequences of which we are living
with today. Now, people are coming together to understand how business can be
reimagined, so that we might better tackle the twin global challenges of climate
change and widening social inequality.

Capitalism has been one of the most important forces driving prosperity around
the world. Yet, despite the promise it can hold to improve lives, it’s not infallible.
As Pope Francis writes in his 2020 Encyclical on fraternity and social friendship
(Fratelli Tutti), focusing solely on profit for profit’s sake subverts the original
purpose of business. “Business abilities should always be clearly directed to
the development of others and to eliminating poverty, especially through the
creation of diversified work opportunities. The right to private property is
always accompanied by the primary and prior principle of the subordination of
all private property to the universal destination of the earth’s goods, and thus
the right of all to their use. … The marketplace, by itself, cannot resolve every
problem. Without internal forms of solidarity and mutual trust, the market
cannot completely fulfill its proper economic function.” The pandemic has
shown “the fragility of world systems” and “demonstrated that not everything
can be resolved by market freedom.”

“We must put human dignity back at the center, and on that pillar build the
alternative social structures we need.”

The fact that so many of the world’s brightest minds and leading voices are
collectively focused on exploring and proposing solutions for how we can do
better at redressing the balance is extremely encouraging to me.

This is not to downplay the size of the challenges before us. “Do no harm” doesn’t
cut it anymore. We need business leaders willing to step up and proactively make
a positive impact on society, revitalizing and reinforcing the social contract by
which companies are allowed to operate.

no. 159 | IESE Business School Insight | 33

REPORT The future of capitalism

Nor should we become complacent, merely content to place

our faith in future generations to fix these planetary and
social issues for us. On the contrary, all of us need to use We need
business leaders
our own circles of influence to help drive systemic change.

willing to step up
This isn’t easy. It will involve rethinking, from the ground
up, not only how we conduct our daily operations, but how

and proactively
our systems are incentivizing, measuring and regulating en-
tire industries. It will also involve coordinated collaboration

make a positive
across disciplines, sectors and regions.

impact on society
It’s also clear that business schools have a key role to play in
teaching the true purpose of business and its role in society,
putting “human dignity back at the center.” We need to make
sure we’re giving business leaders, both future and present,
the tools they need to translate good intentions into deci-
sively positive impact.

I’m encouraged by movements within the business education “The Future of Capitalism” course that IESE launched in 2021
sector to embed ethics and purpose throughout all programs with Shizenkan University – our strategic partner in Japan – is
and activities, and to equip participants with new frameworks a great example of this. More than just another MBA course,
and knowledge on running sustainable organizations. it’s a program designed “to promote social change,” as my
good friend Tomo Noda described it. The fact that it brings
together so many different schools and institutions across
diverse continents speaks to the spirit of collaboration. After
all, these are global problems that need global solutions. And
we hope to build on this over coming years.

Of course there is still so much to be done. Reshaping our

businesses, industries and educational systems as part of
wider global efforts to promote a more inclusive and sustain-
able form of capitalism is hard work. Yet we must not forget
why this needs to be done. We have seen in our own lifetimes
the power of business to drive positive change. But to contin-
ue in a positive direction, we need to come up with new and
better solutions that will make the world a fairer, greener,
more inclusive place for all. Apart from any economic mo-
tives, this is ultimately about securing the long-term future
of the people around us and our planet.

34 | IESE Business School Insight | no. 159

Business
Acceleration
Program
in Munich

Accelerate, Advance, Act

The ability to pivot, innovate and envision multiple scenarios is now more critical than ever. IESE’s
Business Acceleration Program (BAP) is designed for ambitious high-potential managers in the
DACH region who aspire to magnify their organizational impact and enrich their professional
network with other high-caliber peers. This new program will boost your leadership potential with
minimal disruption to your current commitments. In a dynamic learning forum, you’ll future-proof
your career by acquiring breakthrough insights, concepts and frameworks and emerge with a new
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Format:
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sessions held every 3 weeks, all day 8 weekends. Munich. English.
Fridays & Saturday morning.

Find out more at: www.iese.edu/bap

Contact information:
Barbara Breiter
Admissions Manager
bbreiter@iese.edu
+49 89 24 20 9790
no. 159 | IESE Business School Insight | 35
THE BIG PICTURE
A new perspective

The new
drivers of value
To estimate the market value of a public company, it’s common to do a comparable
company analysis, calculating a target company’s value based on what other, similar
companies in the market are worth. However, as the boundaries between industries get
blurrier, the comparable for a company like Tesla or Ferrari may not, in fact, be another car
company. You need to analyze the business model first to determine where the real value
lies. Your closest comparable may surprise you. Let’s take a look under the hood…

Tips when valuing

companies
Dig into the business Envisage different Evaluate each of the Work backward: What revenue growth,
model to discern the future scenarios, scenarios using realistic profit margins and other metrics would the
company’s underlying including changes to ranges for calculating company need in future in order to maintain
sources of value and the current business various ratios. its current stock price? Is there, or could
understand what’s really model. there be, a business model capable of
driving revenue. sustaining those figures?

SOURCE: Calculations done by MBA students as part of a Corporate Finance course taught by IESE finance professor Carles Vergara.
Data based on 2022 forward-looking multiples from S&P Global Market Intelligence (as of July 2021).

36 | IESE Business School Insight | no. 159

 P/E**

37.31x 60.96x
Ferrari Hermès

FERRARI
6.70x
Although you might expect Ferrari’s Daimler
closest comparable to be another
luxury car manufacturer like Daimler, an
examination of two common valuation
ratios reveals that Ferrari’s are closer to
those of a luxury goods firm like Hermès,
TEV/EBITDA*
whose only cars are printed on its limited-
edition silk scarves.
Ferrari 20.44x
WHERE DOES THE REAL VALUE LIE?
• Strong emotional appeal and Hermès 34.35x
connection with brand-conscious
customers Daimler 8.19x
• Status symbol
• Superior craftsmanship and exclusivity

* Total Enterprise Value (TEV) divided by Earnings Before

Interest, Taxes, Depreciation and Amortization (EBITDA)

**Price-to-Earnings Ratio (P/E): The company’s share

price divided by the company’s earnings per share

P/E**

102.00x 51.17x
Tesla Nvidia

6.85x

TESLA VW

If you take apart a Tesla, where does most of its value lie? In
its electric motor? Comparing its ratios with those of another TEV/EBITDA*
well-known electric carmaker, Volkswagen, reveals otherwise.
Tesla seems to be more comparable to the innovative tech
company Nvidia, inventor of the graphics processing unit Tesla 49.13x
(GPU) for PCs, game consoles and mobile devices.
Nvidia 48.57x
WHERE DOES THE REAL VALUE LIE? VW 7.73x
• State-of-the-art AI and machine learning technologies
• Collecting data on user behavior and performance
• Enhanced software with over-the-air updates
HACK
Patently
underrepresented
Why we need more female inventors
Why are women’s diseases, women’s anatomy or came from women-led teams, while that figure grew
women’s needs more generally overlooked by to 16.2% in 2010, resulting in significantly more
inventors? New research points to gender imbalance innovations in women’s health. Still, only about 13% of
in R&D having repercussions for who is benefiting U.S. patent inventors today are women.
from inventions.
If discrimination reduces innovation overall, the
An analysis of more than 430,000 U.S. patents filed good news is that lowering barriers to disadvantaged
between 1976 and 2010 in the field of biomedicine groups can help boost innovation and economic
found significant evidence that who is doing the growth. “There may still be many untapped market
inventing affects what is being invented. All-female opportunities to invent for women – opportunities
teams of inventors are 35% more likely to focus on that could, in turn, improve women’s health.”
women’s health than all-male teams are. Interestingly,
male inventors are less likely to focus their patented Consider Surbhi Sarna, whose own ovarian cancer
innovations on either men’s or women’s health issues scare led her to invent a better cancer-detection tool;
when compared with their female counterparts. and Dr. Patricia Bath, who invented a more precise
treatment for cataracts, which affect more women
While inventor teams with some women follow a than men. Who will make the next
sex-focus pattern, the pattern is “strongest for discovery to, say, make preg-
all-female invention teams, holds over decades, and is nancies safer or improve heart
present even within narrow areas of invention,” states attack detection in female
the research. This suggests that “the female inventor- patients? Giving women
invention link is both the result of women working in full access to the pur-
more female-focused research areas (e.g., gynecology) suit of innovation can
and female inventors identifying opportunities to benefit humankind as
invent for women regardless of the area in which they a whole – and mean we
work (e.g., ocular surgery procedures).” don’t miss out on the
next Curie.
Notably, the number of female inventors is growing
over time: In 1976, just 6.3% of biomedical patents
Where are today’s Marie
Curies? More female
inventors could boost
“Who do we invent for? Patents by women focus more on innovation, particularly
women’s health, but few women get to invent” by IESE’s in the overlooked area of
Sampsa Samila et al. is published in Science. Sampsa Samila women’s health.
gratefully acknowledges funding from the EU Horizon 2020
research and innovation program under Marie Sklodowska-
Curie grant agreement No. 799330.

38 | IESE Business School Insight | no. 159

Nudging by numbers

1
So many of our life choices involve numbers – and the way those numbers
are expressed can influence our behavior. Here are two research-backed
hacks from the field of numerical cognition:
Branding
To achieve a goal, try expressing it in large numbers, even as the numbers
in the eye
of the
express the same value. For example, 34.6% of students with a 120-minute
exam-prep goal planned to begin studying on the very next day, as

beholder
opposed to only 20.7% of students aiming to hit the books for 2 hours.
Having a larger number prompts you to break it down into manageable
chunks and get started sooner. So, try to save $10,000 rather than $10K.
Aim to lose 500 grams a week rather than half a kilo. Write 5,000 words Whom would you trust more: A social
rather than one book chapter. media influencer wearing Nike shoes,
a Puma shirt and Asics shorts, or one
dressed head-to-toe in one brand? As
influencer marketing takes off, managers

or
are increasingly interested in knowing
how best to win over observing consum-
ers. Holding constant the actual influenc-
er personality, how should brands best
120 minutes 2 hours position themselves – quite literally – in
order to maximize the influencer’s influ-
ence? In nine studies across an array of
product categories (running gear, clothing,

or
toiletries, electronic devices, baby gear)
and stimuli (Instagram posts, product
images, logos, product lists, blog posts),
observers tended to trust a multi-brand
user’s recommendations more than a
40% less fat 39.7% less fat mono-brand user. This flies in the face of

2
managers’ (understandable) preference
For sales decisions, try presenting consumers with round numbers not to dilute their own brand by mixing it
first and then precise ones close to the point of purchase. So, a with others. But insisting your own brand
brand of potato chips could be promoted as having 40% less fat in be the sole protagonist might diminish its
the supermarket flyer but 39.7% less fat on the packaging perused by credibility in the eyes of consumers. This
consumers in the store’s snack aisle. It’s about understanding where is not to say that mono-brand posts are
people are in their decision-making process. Early in the search, never beneficial in raising brand aware-
efficiency matters. At the wish-list or short-listing stage, people ness and visibility; rather, when it comes
appreciate ballpark figures, because the information is easier to process to trustworthiness, marketers should be
and quick decisions are easier to make. They search for hotels within a aware that multi-branding can make a
kilometer of the city center or a car that gets good gas mileage. Then, consumer appear as though they have
when it comes time to make the final decision, a preference for accuracy made a thoughtful choice, which may
kicks in. That’s when it’s time to note that a hotel is just 0.6 kilometers actually yield a better response.
from the center or the car gets 31 miles to the gallon.

“Numbers and units affect goal pursuit organization and motivation” and “Reliance on numerical “From mix-and-match to head-to-toe: How brand
precision: Compatibility between accuracy versus efficiency goals and numerical precision level combinations affect observer trust” by IESE’s Isabelle
influence attribute weighting in two-stage decisions,” by IESE’s Jorge Pena-Marin et al., are both Engeler and Kate Barasz (formerly IESE) is published in
published in the Journal of Consumer Psychology. the Journal of Consumer Research.

no. 159 | IESE Business School Insight | 39

HACK

Keys to a meaningful
ESG strategy
Increasingly, companies need to review their thinking, actions and communications on environmental, social and governance
(ESG) concerns, so as to ensure consistency in what they think, do and say on sustainability. Taking these steps will help your
company develop the mindset and habits necessary for cultivating a culture of sustainability – seeing value creation through
the eyes of your stakeholders, taking a long-term view, and substantiating stated commitments with facts.

Consider ESG criteria in terms of the mission,

their materiality and incentives, specifically:

• To what extent do ESG criteria affect or

define the values and purpose of your
organization?

THINK • Which criteria are most relevant to the

stakeholders in your value chain?
• Do managers and employees at all levels
benefit from obtaining good ESG results?

• Don’t just report quantitative data, but use

storytelling to help put the numbers in
contexts meaningful to your stakeholders.

SAY • Be transparent: listen and respond to

stakeholder concerns.
• Use communication channels appropriate
to the message and the audiences you are
trying to reach.

• Conduct a full assessment of your business

using ESG criteria.

DO • Identify the risks and opportunities,

particularly those material to your
value chain.
• Set goals and metrics that link sustainability
to business performance.
• Collect data (on emissions, for example)
and then follow up on the results.
• Appoint an ESG Director responsible for
promoting ESG issues and making sure
those issues factor in decision-making.

Horizonte ESG, No. 49 in a series of reports by IESE’s Joan Fontrodona

and Philip Muller for the CaixaBank Chair of Sustainability and Social Impact.
No. 48 on the Circular Economy is also available from https://www.iese.edu/faculty-
research/chairs/caixabank-sustainability-social-impact/

40 | IESE Business School Insight | no. 159

Search, Click
and Discover .
In your ongoing quest for knowledge, there’s no time to lose.
IESE Publishing allows you to expand your understanding of the
latest global management trends with a simple click of your mouse.

Our streamlined portal features an exceptional collection of

case studies, as well as complementary content to enrich your
understanding of critical leadership issues.

Go to www.iesepublishing.com and discover a world of

knowledge at your fingertips.

no. 159 | IESE Business School Insight | 41

+IESE

Eghosa Oriaikhi Mabhena

CEO of Puma Energy’s
Africa business

Take a
chance,
I dare you
 Born in Nigeria and educated in London, Eghosa Oriaikhi
Mabhena has worked internationally for two decades, first
for Schlumberger and then for Baker Hughes. Now with
Puma Energy based in Johannesburg with responsibility for
18 countries in sub-Saharan Africa, she says:
“My goal was always to acquire enough experience to
come back and make a difference in Africa – to be close
to the end customer, the people we are impacting and the
communities we are energizing.”

E
ghosa Oriaikhi Mabhena (Global Ex- that the world can trust. The onus is on each of us,
ecutive MBA ’13) understands that whether at work or in our personal lives, to be clear
sustainability is not just about creat- where we stand and then to live by those values –
ing business models that respect the to be the change we want to see in the world. We
environment, but also about creating might also have to create the conditions, if they
a working environment that attracts and retains don’t currently exist, for those values to thrive. And
diverse talent who are resilient and representative that’s what I’m trying to do in the energy industry.
of the population at large. Here, she discusses the
challenges of managing in post-COVID times and What are some of the things you’re doing to make
of being a woman in a traditionally male-dominat- the energy transition?
ed field, as well as what it means to be an ethical We’re aiming to drive environmental, social and
leader today. governance (ESG) commitments and deliver on
U.N. Sustainable Development Goals by: developing
Between COVID-19 and climate change, now energy infrastructure; providing sustainable, green
must be a tough time to work for a petroleum energy; and transforming under-energized commu-
company… nities with reliable, cost-effective sources of power.
We believe that a downstream company like ours, So, we’re using best-in-class technology to improve
close to the end user, can play a significant role in energy access and reliability compared to tradition-
the energy transition. In fact, throughout my ca- al grids, and using more renewable resources, like
reer, I have always gravitated toward that part of solar or wind. We have the level of access to com-
the business that is closest to the end consumer, munities and the level of investment necessary to
especially in emerging markets. This puts us in a make these changes, such as electric chargers for
better position to address issues such as energy electric vehicles. I see our role as very exciting.
poverty – getting access to the very end of the sup-
ply chain. That’s our role, and it’s one we’re very In addition to changing the business mod-
proud to take. el, you’re trying to make the industry more
female-friendly. How?
I think there’s a misconception that to be ethical in In some fields, there can be an attitude of, “We’re
business, you can only work for an NGO. Not so. In used to how it is. We don’t know if something else
any industry, you can still be a values-based leader will work.” That’s why we need to see more women

no. 159 | IESE Business School Insight | 43

+IESE Face to face

succeeding in these fields, to show it can be done, as getting more women into technical degrees is
because in careers where you do see other women, getting them to stay in technical fields through-
you think, “Well, if she can do it, then I can, too.” out their careers. They may take a career break for
That’s how the human mind works. So, we need family reasons, or think it’s not possible to have
more women achieving higher positions in order a family and a career in this industry. We have
to inspire others. Representation matters. to keep challenging the status quo, to show the
industry – and women – that they can actually
The oil and gas industry has been changing over do both.
the past 10 years. Companies have come to appre-
ciate that diversity in thought and expression and What obstacles have you faced in this regard,
in leadership style is valuable. For example, men and how did you overcome them?
and women might react to a certain result differ- I’ve experienced the gender pay gap, finding out
ently, and while it used to be that the female style that I was earning significantly less than my male
was regarded as a weakness, now people see they counterparts for the same role. That was discour-
are both equally passionate, just that they express aging. Finding mentors and coaches can also be
it differently, and both reactions are beneficial. Just challenging. It’s hard to reach senior levels, espe-
getting to that point has taken time. cially in this industry, without mentors helping
you out and developing you to be successful. Yet,
I’m also focused on getting more women into because of harassment concerns, men can be hes-
CSTEM (Coding, Science, Technology, Engineer- itant about mentoring women. Fortunately, that’s
ing and Math) degrees. When I did my mechanical changing, and there are safeguards being formed
engineering degree at University College London, I around male mentors supporting female talent.
was one of very few women. But just as challenging
You need someone to take a chance on female
talent – not to tick some diversity box but because
the employee has genuinely earned the right to be

“More so than in that role. So, as women, we need to be compet-

itive and at the top of our game. But then we may

any other time,

have to pound on the door and say, “Hey, take a
chance on me.” What I’m doing through AWEinE-

we’re seeing
nergy, an organization focused on getting more
women to CEO and C-Suite positions, and for-
merly through The Boardroom Africa, which is

this concept about promoting more female talent onto boards

across the continent, is this: teaching women to

of humane
say, “Here is who I am, here is what I have to offer,
and I dare you to take a chance on me.”

leadership” Ultimately, you have to take a chance on yourself.

You have to understand what your value is, what
you have to offer, what your strengths are, and
from that point, you have to be daring, because
the journey isn’t easy. And for those of us who

44 | IESE Business School Insight | no. 159

stayed the course, we need to men-
tor other women, sharing the lessons
we’ve learned to get to where we are.

How has COVID-19 helped or

hindered progress?
As a woman and a mother, I’ve seen
how the experience of COVID-19 has
challenged working families, with
parents having to work and home-
school their children for months on
end. While some companies have adapted so that had forgotten those who were fundamental to our
women would not have to leave the workforce, we societies; now doctors, nurses, teachers, even peo-
know that, in many cases, women have exited the ple who were making deliveries and people who
workforce to take care of children. As business supported the ecosystem for the home to keep
leaders, we spent years trying to get more women functioning, have become extremely important.
into senior leadership positions, and now the pan-
demic has challenged that balance. As leaders, our role is to make our businesses
attractive places to develop and retain talent, based
There is also the growing problem of educational on new value propositions. In looking to join a
poverty. We have an entire generation that may po- company, people are going to be basing their de-
tentially be impacted by delayed education. Where cisions on what we have done throughout the pan-
there has been a lack of internet access or sustain- demic and what we will do to support people and
able power or iPads, children have fallen behind, society. At the end of the day, leaders need to be
and this educational gap will become more appar- people who drive the agenda of human welfare and
ent over time. human equity forward, with creativity and inno-
vation, so that it becomes the norm for everyone,
Then you have vaccine poverty. Look at the rate at rather than the divides that we see today.
which different countries are vaccinating against
COVID-19. We know that, depending on the adop-
tion of health passports, travel may become selec-
tive. For those countries that cannot afford rapid
progress on vaccination programs, the pandemic
has exacerbated economic divides.

What role can business play in the post-pan-

demic recovery?
More so than any other time, we’re seeing this con-
cept of humane leadership. Companies have had to
Eghosa Oriaikhi Mabhena spoke on “Leadership for
address the mental health of their workforce. The Sustainability” as part of the annual Doing Good Doing
role of government vis-à-vis society has changed Well conference (www.ieserbc.com), which was held
in March 2021 on the theme of “Rethinking Business in
rapidly. We’ve seen a shift in emphasis: Tech had a Post-Pandemic World.” She also spoke at the annual
become the be-all and end-all to the point that we Symposium of the IESE Executive Coaching Unit.

no. 159 | IESE Business School Insight | 45

+IESE Entrepreneurship

My better plan
for plastic

A Spanish startup’s superpower

is turning plastic into fuel.

P
erhaps nothing symbolizes the environmental
destruction of the past 50 years more than the
vast quantities of single-use plastic bottles and
bags choking the planet’s rivers and seas. But
for Carlos Uraga, an engineer turned serial en-
trepreneur, “The problem is not the plastic. The problem is
badly managed plastic waste.”

In nearly every sector, plastic use is growing – accelerated in

part by the coronavirus pandemic, as single use was believed
to be safer. From its light weight to its hygienic properties to
its durability, plastic’s versatility makes it a hard habit to break.

46 | IESE Business School Insight | no. 159

 Quim Roser
credit:

Carlos Uraga
CEO and Co-founder of Nantek, winner of the
GFT Banco Sabadell Sustainability Award,
part of IESE Business Angels’ Sustainable
Investment Forum

www.nantek.tech

no. 159 | IESE Business School Insight | 47

+IESE Entrepreneurship

“Determination,
effort and
perseverance
are indispensable
qualities in an
entrepreneur”

Enter Uraga, who was determined to do something about

it. An industrial design engineer, he had already founded
a robotics company and an English-language school. “My
family says that from the time I was little I would say that I
didn’t want to work for someone else,” he says. Instead, he
prefers the freedom to create new projects and explore his
own limits.

“You always have to start with the determination to do some-

thing,” he explains. From there, he outlined a plan. As with
any entrepreneurial endeavor, he made a few mistakes on
the path to execution. “In the beginning, that’s normal,” he
says. “But then you learn how to come up with a better plan.”

Winning formula
The result is Nantek, which, following Uraga’s research into
nanomaterials and reactive agents, has developed a pro-
cess to convert plastic waste into fuels, petrochemicals and
other products.

Nantek was one of eight startups chosen to take part in the

IESE Business Angels Network’s first Sustainable Investment
Forum, in which various entrepreneurs presented their
projects – ranging from floating offshore wind turbines,
to electric bike parking stations, to software for measuring
companies’ carbon footprints. Nantek won the forum’s GFT
Banco Sabadell Sustainability Award, chosen unanimously
because the judges saw the potential impact it could have on
the seemingly intractable problem of plastic waste.

48 | IESE Business School Insight | no. 159

At present, well under 20% of plastic is recycled, with the rest Global Alumni Reunion
dumped into toxin-leaching landfills or burned in heavily pol- November 11-13, 2021
luting incinerators. One of Nantek’s advantages is that it can
take all kinds of mixed plastics – without the need to sort
Live from Madrid
or separate by type or level of degradation. Nantek reactors Sustain abilities
break down the carbon bonds of the plastics, producing new
compounds and elements such as hydrogen, paraffin, kero- www.iese.edu/GlobalAlumniReunion
sene or synthetic fuels.

How can business leaders forge the path to a net-

In order to test the market, Nantek carried out industrial tri-
zero economy and a more equal world in 2021?
als, sending samples of its products to the main fuel produc- This year, IESE will bring together policymakers,
ers in Spain. “Four or five years ago, such companies wouldn’t corporate leaders, NGOs and thought leaders to
have been interested because their focus was on fossil fuels,” discuss business as a force for good in society
says Uraga. But with EU regulations requiring that a portion through sustainable leadership. Broadcast live
of their production portfolio come from second-generation from IESE’s newly expanded Madrid campus,
fuels, “now they are interested.” speakers and special guests will interact with a
safe number of attendees along with thousands
Under the EU Green Deal, every industry is looking to shift connected virtually from around the globe.
away from fossil fuels in order to cut emissions. That’s more
To inform your thinking, check out these
good news for Nantek. Although its natural clients are energy
past reports of IESE Business School Insight
and transportation companies, its technology has applications
magazine, which you can find online:
for other industries as well.

Nantek is seeking 1.9 million euros in financing to com- The Green Deal
plete its first pilot plant with an industrial-scale reactor, Why green stimulus
in the Basque Country, which it hopes to be online in early may be the key to
2022. Its first full plant, which would have 13 reactors, will cranking up crisis
have the capacity to process around 20,000 tons of plastic recovery
per year. After that is up and running, Nantek would like to
build more plants around Spain as well as internationally.
Build Back Better
How business model
Achieving that will take determination, effort and, above all,
innovation can help
perseverance – qualities that Uraga believes are the most in-
your firm out of the
dispensable for an entrepreneur to have. “The difference be-
crisis
tween a successful entrepreneur and one that’s not is often
that the successful one just tried more times.”
Countdown to 2030
Luckily for Uraga, someone once told him he had those Meeting the
qualities, along with courage and putting his heart into Sustainable
everything he did. “For me, that’s a good way to define Development Goals.
what it takes for a project, and many other things in life, to Are you ready?
move ahead.”

article by : Michelle Wallin

no. 159 | IESE Business School Insight | 49

+IESE Roundtable

From left to right:

Albert Triola
Country Leader
Oracle, Spain
Alumnus of Custom Program developed for Oracle by IESE

Xavi Escales
Founder and CEO of AlwaysPeopleFirst
and AlwaysPeopleFirstTechnologies
Former CEO of Asics, Iberia
Alumnus of various IESE Focused Programs

Marta Sanchez Serrano

Head of Group Connected Retail
and Distribution
Vodafone, London
IESE MBA ’99

The best
option is a mix
of working
virtually and
in person
50 | IESE Business School Insight | no. 159
 AT: Prior to COVID-19, we were in the process of relocating
our headquarters to be closer to our customers and partners,
which led us to rethink our workplace, not only as an exciting
physical space for employees, but also as a collaborative envi-
ronment for all our other stakeholders. We made a purposeful
decision to focus on flexibility, designating 40% of the space
for workstations and the rest for areas that encourage gather-
ing, collaboration and learning for our entire network of cus-
tomers and partners. To us, the pandemic and the reflection
on workspaces that has come in its wake have confirmed that
the model we had been pursuing – of goal-based management
and hybrid, flexible work – was the right one.

Some managers fear remote work because of the “I won’t

see them” factor. How do you lead people you don’t see?
XE: If you have to physically see your employees to make
sure they are doing their jobs, you already have a problem.
Your work as a manager is not to micromanage but to be
there when your team needs you and to think about where
the company should be heading to be successful in the fu-
ture. As managers, we have to be demanding in what we ask
of our teams (both in-person and remote workers) and more

T
flexible with them when it comes to the way they organize
their workdays.
he potential benefits of remote work have been
talked about for years, but it wasn’t until the AT: You have to trust your employees, avoid micromanage-
COVID-19 pandemic forced millions of us to ment, and not ride your teams or demand they be physically
work from home that the world was collectively present and connected 24/7.
able to experience the relative merits for them-
selves. Now, as we return to the office, three experts – Marta MS: In this new remote work environment, soft skills – such
Sanchez Serrano, Albert Triola and Xavi Escales – share their as empathy, active listening and the ability to anticipate and
firsthand experiences of remote and office working, busting understand each other’s needs – become increasingly import-
the myths and suggesting some practical tips for the future ant. We need to become even more conscious about commu-
of work. nication and mood management, setting continuous goals to
keep teams committed.
What was work life like for you in 2020 B.C. – Before COVID?
MS: Even before the pandemic, our way of thinking about Trust seems to be a common thread. How do you foster that?
work was changing. Organizations were already becoming less AT: It starts with the leaders. They have to lead by example.
hierarchical and more horizontal, and linear career ladders They guide, define and communicate organizational goals and
were diminishing. We were encouraging employees to leave priorities. We define smart goals that cascade down and adapt
their comfort zones and actively seek change in order to keep to each organizational level. These goals are reviewed every
learning and stay competitive. The abrupt switch to remote quarter and half-year to create a flexible team management
work because of COVID-19 merely accelerated these trends. model that is very open to working from anywhere.

no. 159 | IESE Business School Insight | 51

+IESE Roundtable

You also have to get employees involved, so that

they are part of, and actors in, this process. And
the corporate space itself, with the assistance of
the right technologies, needs to reinforce the work
models you desire.

If there is flexibility in all these areas, then the

middle managers and more junior employees will
be more likely to adopt this culture of trust and
commitment. We’re convinced that such a culture
adds value, makes us more competitive and is in
keeping with the times.

Does that mean we don’t need offices anymore?

MS: I’ve been working remotely for many years,
and although I defend the value of this model, I
also believe we cannot do away with human con-
tact. In a virtual relationship, it’s harder to capture
nonverbal communication, which is important for
CREDIT0DULD'LDV XQGHUVWDQGLQJPRWLYHVDQGDYRLGLQJFRQåLFWV:H
are social beings: being close to others boosts op-
timism and helps us deal with everyday challenges.
To me, the best option is a mix of working both virtually and
Mireia Las Heras (pictured), professor of Man- in person.
aging People in Organizations and Director of
the International Center for Work and Family at XE: Human beings are emotional, social creatures. We may
IESE, collaborated with the consultancy Savills EHDEOHWRGRDZD\ZLWKRIäFHVEXWQRWVRFLDOJDWKHULQJV,WÔV
Aguirre Newman to study the advantages and important to make an effort to create strong bonds among
disadvantages of remote and in-person work. employees because this will make teams more resilient.
More interviews like this one can be found in
the full report “A Sustainable Work Model” AT:7RPHWKHXQGHUO\LQJGHEDWHLVQRWÖRIäFHYVQRRIäFH×
(ST-610-E), along with business cases, videos EXWUDWKHUKRZWRFUHDWHHIäFLHQWFRPSDQLHVZKHUHZKDW
and tests to assess how to take advantage of PDWWHUVLVQÔWWKHRIäFHRUWKHWLPHWDEOHRUWKHVWDUWRUHQG
remote work. RIWKHZRUNGD\EXWEHLQJHIäFLHQWLQOLQHZLWKJRDOV'RZH
QHHGRIäFHVLQWKHVHQVHRIJRLQJWRDSK\VLFDOEXLOGLQJDVDQ
REOLJDWLRQ",WKLQNZHVKRXOGWUHDWWKHRIäFHPRUHDVDFOXE
Use the QR code to read more, or go to one that encompasses employees, managers and all our cus-
https://insightreports.iese.edu/en/a-sustainable-work-model/
https://mireialasheras.com/
tomers and partners, and then weigh the importance of being
there in person from that standpoint. Informal or structured
conversations, and chance meetings in hallways or when hav-
LQJFRIIHHDUHDOOYDOXDEOH:HKDYHWRFRQFHLYHRIWKHRIäFH
DVÖEHLQJSUHVHQWZLWKDQGIRUHDFKRWKHU×

MS:2IäFHVSDFHVVKRXOGIDFLOLWDWHFROODERUDWLRQ7KDWPHDQV
they should be less clinical and more like the living rooms

52 | IESE Business School Insight | no. 159

 6 MYTHS

1. Everyone wants to work remotely

in our homes, with natural light, good ventilation and access all the time
to the outdoors, to stimulate psycho-emotional connection. Only 12%, mostly working mothers, want to work
Open-plan workspaces should allow for personalization, with remotely every day, mainly for family reasons.
modular panels that allow rooms to be divided according to The majority prefer something in the middle:
daily capacity and collaborative working arrangements. working from home for two or maybe three days
a week.
What are some other issues to be aware of?
2. Everyone can work remotely
XE: It’s important to bear in mind the differences between
Not so. Personal care (hairdressers, dentists) or
working remotely and at the office, so that companies can
physical manipulation (car mechanics, cleaners)
create the optimal working conditions to maximize employee
must be done in person. And jobs like teaching
productivity, while also ensuring well-being. Early in the pan- lose part of their value if always carried out
demic, studies showed employees were working more hours remotely. For those who can work from home,
per day, on average, which affected their ability to disconnect they still require wider support from bosses,
and had an impact on their well-being. Once we’re back to life colleagues and domestic partners to be effective.
as usual, we need to make sure people have a reasonable work
environment at home – one that capitalizes on the advantag- 3. Performance is lower with remote work
es of flexibility, less time spent commuting, and so on. The Au contraire: Productivity and work quality
problem is the lack of training in leading teams remotely, to reportedly go up on out-of-office days, as do
get the most out of collaboration that generates innovation. employee pride, dedication and commitment.

4. Remote work hinders innovation

MS: With remote and in-person work here to stay, we need to
It’s not remote work per se that boosts or hinders
adapt workspaces to the needs of the job, not the other way
innovation but personality type. For highly
around. We need to enhance the advantages that can only be creative people, working from home gives them
found in the physical world, while optimizing the experience space to be more innovative, while less creative
of remote connection. Having remote teams in different time people might get more out of brainstorming with
zones may require hyperflexible schedules and more fluid colleagues in the office.
ways of working, which could interfere with family and per-
sonal lives, or alternatively, open up possibilities to improve 5. Remote work eliminates the need to meet
the balance. in person
Routine work, preparing reports and studying
Companies need to be much more mindful of the implica- issues in depth rarely require face time in
the office. But for certain activities, like sales
tions, adapting work to the needs of the company, but also
meetings with clients, physical meetings remain
to the needs of the individual and each individual’s family
preferable.
situation. Professional development policies are going to have
to become much more personalized. 6. Lots of time is wasted at the office
It depends. Strong self-managers benefit more
As project work will be used more, marketplaces for finding from remote work, registering more “pride of
professionals with the right knowledge and experience will belonging” (500% more), more energy (120%),
become more important. Organizational structures will need more willingness to do what the company
to become more horizontal and agile, including the use of requires (100%) and higher quality work (50%)
“third places” – that is, spaces that are neither in a corporate than those who lack the capacity for self-
office nor at home but are suited to the needs of the individual management.
and the job they have to do. All this will need to be supported
by the right tools, the right technology and the right processes Based on a survey of 3,450 workers from 11 different countries,
to make it work for everyone. covering more than 15,000 workdays.

no. 159 | IESE Business School Insight | 53

+IESE My story

Ignasi Cambra
Barcelona-born pianist, hailed by legendary
conductor Valery Gergiev as “someone who can
talk to me at the piano.”
Cambra will perform at this year’s Global Alumni
Reunion in Madrid as part of the social program
on Saturday, November 13, 2021.
www.ignasicambra.com/en
David Arasa
credit :

54 | IESE Business School Insight | no. 159

PLAYING BY HEART
It’s been a tough year but pianist Ignasi Cambra remains upbeat.
With almost all his 2020 concerts canceled, he used the time to
discover he also had an ear for business. Here he reflects on life,
art and entrepreneurship...

Music is what I’ve always enjoyed since I began I love what I do, but I really feel like an en-
musical studies at age 6, and it ended up being my profession trepreneur at heart. The idea of making a positive
without me ever really planning it. The music world is highly impact and giving back to society is something that speaks
competitive. Like sports, many people try to do it profession- to me. Although I’d be the first to say that the arts are ex-
ally but very few actually make it. It’s also extremely unfair. tremely important to society, I always wanted to do some-
Admission rates at the world’s top music schools are lower thing that had a more direct, practical impact on people’s
than for business schools. Many talented people who don’t lives, which is one of the reasons why I decided to do an
get in are just as good as, or even better than, those who do. Executive MBA at IESE.
Like many other professions, luck plays a part.
Art and business don’t have to be oppo-
Talent is important, but it’s not everything, sites. Too often in the arts it’s one extreme or the other:
and neither is constant work. It’s one thing to sit at the piano either you focus on the financial side at the expense of creat-
and play the notes, and another thing to practice in a way ing genuinely interesting experiences for the audience, or you
that’s useful and where you’re actually making progress. For manage very well from an artistic standpoint but are losing
me, if I practice more than five or six hours a day, I’m just money. It’s not either/or. In both cases, it’s about working with
wasting my time, and if I keep going, I’ll create bad habits. other people – those you like, those you don’t like, those you
That took some time for me to understand. need to have a good relationship with, those who seem like
they don’t matter, but they do. Always. In the end, business is
People always think it’s incredible that I knowing how to deal with life.
play by memory, except all pianists, sighted or not, play
by memory. What’s different is that they may learn the score
by reading it through first, but they’ll still have to memorize it.
I learn by ear, which may be slower, but then I’m memorizing “Everyone has
it at the same time, so in a sense it’s slightly more efficient.
things they find
I’m not saying I never have challenges. Of
course some things are more difficult for me, but everyone, challenging but
with or without a disability, has things they find challenging.
One of my teachers once said that, instead of complaining, you can always
you can always adapt and get something positive out of it.
Everybody needs to understand what they’re not so good at, find something
which can be just as important as understanding what you’re
really good at. It saves you a lot of trouble and future problems. positive”

no. 159 | IESE Business School Insight | 55

Food for thought
SMART PICKS

Can we talk? Yago de la Cierva has written several case

studies on the current fraught sociopolitical
environment and culture wars, leaving every
leader feeling conflicted. Should they take
“Speak, so that I may see you,” Socrates sides? How to have difficult conversations
said, meaning that character is revealed that unite rather than alienate? What you say,
more through one’s speech than looks. What and how you say it, truly matter – and even
does your speech say about you? Business more so when more of our conversations
leaders spend their days having all types of are happening online. As hard as it is to
conversations. And as stakeholder demands have constructive conversations, with these
increasingly pull CEOs in different directions, helpful resources, you’ll never have a reason
it’s vital to choose words carefully. IESE’s to say, “No comment.”

Difficult conversations
Why do we find feedback conversations so
Conversations
difficult? Harvard’s Sheila Heen, author of
we don’t have Difficult Conversations and Thanks for the
Santiago Alvarez de Mon’s book of Feedback, explains how to change the feedback
this title (Las conversaciones que no culture in your organization. It requires
tenemos in Spanish) explores the understanding what is being said, separating
promise and importance of the con- the message from the messenger, and know-
versations you owe it to yourself and others to have. ing your triggers. Find feedback conversation
You reveal yourself as much through your silences and kits on her website (stoneandheen.com),
gestures as your words. In employing nonverbal tech- obtain her article “Feedback tips for less
niques such as listening (versus hearing), silence and grumbling, more growth”
undivided attention, make sure you’re not using them from iesepublishing.com and
to avoid certain conversations. The quality of your watch her IESE talk “Feed-
conservations affects your leadership, your relation- back, a game of give and take” at
ships and, ultimately, your ability to rule yourself. www.youtube.com/watch?v=9uQlG7LbT_k.

56 | IESE Business School Insight | no. 159

 Conversations FROM MY DESK
with bots
Online interviews can By Ines Alegre &
speed up HR processes, Josep Valor
especially when com-
bined with AI tools able
to detect personality, thinking style, emo-
tional reactions and tone of voice. Chatbots
give job info to candidates while screening
Burst your conversation bubbles
candidates for recruiters. Jose Ramon Pin
We recently asked individuals to self-identify their political persuasion
and Guido Stein’s book (Liderar personas and then showed them 40 news headlines, some real, some fake. As
con inteligencia artificial in Spanish) suspected, individuals tended to rate a news item as true if it confirmed
summarizes the main tools and provides their political bias, even if it was false. Why? Psychologists call it confir-
exercises to evaluate the brave new world mation bias. We gravitate toward that which affirms our existing beliefs.
of AI-moderated conversations in people Social media only amplify this tendency, baking confirmation bias into the
management. business model by monetizing our likes and clicks. This keeps us locked in
filter bubbles. Here are five things you can do to break this trap:
Impactful 1. Stay alert! What steps are you taking to seek points of view that chal-
conversations lenge your conversation bubble? Doing this may make you feel defen-
sive: resist it. Defensiveness is a perverse form of commitment – that is,
Practice makes perfect.
once you’ve committed yourself to a cause, an action or a belief with an
So says communication
investment of money, time or effort, you’re prepared to double down and
expert Conor Neill in the video “How to
defend it. This irrational behavior is known as “the psychology of sunk
have impact when you speak,” in which he
cost.” It’s why we keep investing, even when it would be better to stop,
stresses the importance of doing the hard because we don’t want to admit we were wrong or lost money. Proverbs
work alone of preparing for one-on-one like “to throw good money after bad” are timeworn sayings for a reason.
conversations or delivering presentations.
2. Ask for external, neutral opinions. Consider inviting an outsider
Try recording yourself on your phone or
onto your board – someone less biased and less steeped in “the way
webcam and then watch it back. Practice
things are done here.” Obviously, you do need knowledgeable people.
helps you know the words, so when you
However, on any decision-making body, you also need a person who can
talk with decision-makers, you can pay
offer a neutral vision, with no insider view or vested interests.
attention and focus on the person in front
of you. These and other practical tips can 3. Appoint a devil’s advocate. When tasked with a project, don’t just
be found on his blog: www.conorneill.com. surround yourself with cheerleaders but appoint a devil’s advocate –
someone whose job it is to challenge. Rotate this role among different
members of the team, so the same person doesn’t get stuck being the
Better conversations company party pooper.
“Is there any skill more important than 4. Form diverse teams. Your biases won’t be the same as another’s,
being able to sustain coherent, confident which is why it’s so important to form diverse teams. Diversity helps bal-
conversation?” asks National Public Radio ance out everyone’s different biases, ensuring a marketplace of ideas.
host Celeste Headlee in her TEDx talk “10 5. Perform pre- and post-mortem analyses. Before you embark on
ways to have a better conversation.” She your next effort, perform a pre-mortem – a forward-looking process
proposes: be present; don’t pontificate; to identify potential vulnerabilities. Likewise, at the end of every project,
ask open questions; go with the flow of routinely perform a post-mortem, analyzing what went wrong and what
the conversation; admit what you don’t should be improved for next time.
know; don’t equate your experience with
Make these conscious habits and you stand a better chance of breaking
the one sharing their own; don’t repeat
out of your bubble.
yourself; stay out of the weeds; listen; and
be brief. It boils down to taking an interest
in other people – and being prepared to Ines Alegre is assistant professor of Managerial Decision Sciences and Josep Valor is
be amazed by what they have to say. professor of Information Systems and the Indra Chair of Digital Strategy at IESE.
Focused
Programs

We’ve adapted And you, what are your training needs? How much time do you have and
where are you based?

to the current Find the training you’ve been looking for in our Focused Program portfolio,
updated with new content to include the business world’s latest trends.
context, without This year we’re offering new formats and methodologies that will allow you

sacrificing to continue learning wherever you are, without compromising the academic
excellence of IESE.

IESE’s quality Lead the present. Be ready for the future.

or rigor. iese.edu/focused-portfolio +34 91 211 3050

 KNOW

By Federico Sabria, Alejandro Lago In conversation with By Dorie Clark

and Fred Krawchuk Romain Boulongne

Lessons from Thinking 4 principles

9/11: Operations out of to manage
in times of crisis the box your career for
the long term

Page 60 Page 70 Page 74

Lessons
from 9/11:
Operations in
times of crisis
By Federico Sabria, Alejandro Lago and Fred Krawchuk

On the 20th anniversary of the September 11, 2001

terrorist attacks in the United States, it’s worth revisiting
how leaders responded. That story contains useful
lessons for distinguishing between clear, complicated,
complex and chaotic situations, and managing the
associated operations challenges accordingly.

60 | IESE Business School Insight | no. 159

 Javier Tascón
illustrations :

no. 159 | IESE Business School Insight | 61

KNOW Lessons from 9/11: Operations in times of crisis

O
n September 11, 2001, a few square A tree that was pulled from the rubble – the Sur-
blocks in Lower Manhattan were vivor Tree – was nurtured back to life and stands
thrust onto the world stage when in the middle of a grove of memorial trees. There
two hijacked planes struck the is an on-site train station, designed by the famous
Twin Towers of the World Trade Spanish architect Santiago Calatrava and featuring
Center complex in New York City, claiming the a stunning Oculus roof. These are works of art that
lives of 2,753 people, in addition to 224 other peo- leave no viewer indifferent.
ple killed in plane crashes at the Pentagon and
in Pennsylvania. Despite everything, life goes on. Policemen make
their rounds. Window washers work their squeegees.
The operational response to this terrible attack was Baristas make coffee to go. And in the surrounding
extremely challenging, to say the least. Some ac- office towers, thousands of executives sit in front of
tions were highly appropriate, making them worth their computers, going about the daily grind.
emulating; others are better left forgotten. This ar-
ticle highlights some key takeaways. Life has returned to a state characterized by the
Welsh management consultant Dave Snowden as
Having presented this material in various academic clear and simple. See his Cynefin diagram, which
sessions at IESE, we know that many executives we will refer back to throughout this article.
encounter challenges similar to those faced by New
Yorkers that day, with clear parallels to the prob- Anyone can understand cause-and-effect rela-
lems that they themselves have to manage when tionships. When these are clear, companies work
their business environments go from being simple hard to standardize them, so everyone knows ex-
and repetitive to complicated, complex and some- actly what to do and how to respond in any given
times chaotic. situation. These are codified as best practices. In
these contexts, we assess the situation (a dirty win-
Simple wonders dow, for example), we categorize the task (window
Walking through Ground Zero today is a mov- cleaning) and we take action (we clean the window).
ing experience. It’s now the site of the National So far, so simple.
September 11 Memorial and Museum. Where the
towers once stood are twin reflecting pools with When it gets complicated
waterfalls that disappear down two central voids. However, “simple” does not describe the problem
that the architect David Childs faced when design-
ing One World Trade Center, the new tower he set
out to build as a symbolic testament to American

Few teams in resilience after the attacks. It had to be taller than

the previous Twin Towers. Indeed, when finally

the world would completed and officially opened in 2014, it became

the tallest building in the United States, reaching a

be able to handle height of 1,776 feet (541 meters), a symbolic number

because 1776 was the year the U.S. Declaration of

challenges of
Independence was signed.

that caliber
Designing a tower that high requires techniques one
can learn in any engineering or architecture school.
The laws of physics apply, with known cause-and-
effect relationships. Yet Snowden would say that

62 | IESE Business School Insight | no. 159

Cynefin® model

Complex Complicated
Decision model: Decision model:
Probe Sense
Sense Analyze
Respond Respond
= Emergent Pracce = Good Pracce

Disorder
Aware/
Confused

Chaoc Clear
Decision model: Decision model:
Act Sense
Sense Categorize
Respond Respond
= Novel Pracce = Best Pracce

In this sense-making model called Cynefin (pronounced kuh-nev-in), we start in a central

space of disorder – that is, not knowing what state you’re in. Snowden describes this
space as “aware but confused.” First, decide the nature of the situation – ordered or
disordered? – so you can get yourself out of that confused space. If ordered (right side),
is it clear or complicated? If disordered (left side), is it complex or chaotic? Then you can
start to manage it accordingly.

source: Go to Cognitive Edge: The Cynefin® Co. website (www.cognitive-edge.com) where you can find
tools, resources and explainer videos to apply Dave Snowden’s model to your own operations.

Childs had a complicated problem on his hands. Few top of a concrete platform as was the go-to solution
teams of professionals in the world would be able to until 9/11. Instead, they invented a super-strength
handle challenges of that caliber. In designing and concrete core, like a huge tree trunk, to act as the
constructing a building like One World Trade Center, spine of the building, which ought to withstand any
Childs had to search for innovative solutions based impact. Also, when a building is that high, you have
on deep, expert knowledge and analysis. to solve the problem of how to deal with winds
of 100-plus miles per hour pressing against the
For example, the building had to be tough enough glass at the top. The solution was to change the
to survive anything, from the most violent storms building’s shape as it rises, so the air is deflected in
or earthquakes to an attack like that of 9/11. That’s different directions at every level, and the vortices
more complicated than erecting a steel frame on can’t gain strength.

no. 159 | IESE Business School Insight | 63

KNOW Lessons from 9/11: Operations in times of crisis

Even the station designed by Calatrava was not so Out of order

simple. The Oculus roof is more like a sculpture, Whether simple or complicated, we’re still dealing
and there were few steel suppliers able to execute with an ordered world where basic rules apply. Yet
it. The end result is magical, especially every Sep- we know from experience that life can throw us
tember 11 when the sun is perfectly aligned with the into situations that are more complex or even cha-
central axis of the building and floods the central otic, where obvious cause-and-effect relationships
hall with light, shining most intensely at the exact go out the window. That was what happened on
hour when the second tower fell. September 11, 2001 and in the months afterward.

Were Childs’ solutions the best ones? Is Cala- “As we know, there are known knowns; there are
trava’s station the best designed ever? No. With things we know we know. We also know there are
complicated problems, there is no “best” solution known unknowns; that is to say, we know there
but rather several good ones. And among the few are some things we do not know. But there are also
experts able to address those problems, there’s unknown unknowns, the ones we don’t know we
no consensus on which is the “best” approach, don’t know. And it is the latter category that tend
because each has their own quirky way of doing to be the difficult ones.”
things. But they all have one thing in common:
They start, like with simple situations, by evaluating These famous words were uttered in 2002 by
the problem. However, instead of putting it into a George W. Bush’s Secretary of Defense, the recently
neat category like you would with simple process- deceased Donald Rumsfeld, in making the case for
es, they analyze it. And only then do they go on to invading Iraq and toppling Saddam Hussein as a
execute their solution. response to 9/11. Rumsfeld was asked by journalists

64 | IESE Business School Insight | no. 159

 We know life can throw us into
situations that are more complex
or even chaotic. That was what
happened on September 11, 2001

whether there was definitive proof of weapons of

mass destruction to justify such action. His answer
made him sound like he was obfuscating.

But the known/unknown matrix is not a fudge.

Variations of it are used to this day in project
management and strategic planning, and it has
some parallels with Snowden’s framework. The
known knowns are the simple and clear world as
described before, where everything is known and
there are no surprises. The known unknowns – the
things “we know we do not know” – are the com-
plicated world for which the probability of future
events occurring can be analyzed and determined.

In the same way that Childs knew he had to solve

design problems that he did not yet have answers
to, many companies do not yet know how much
they will sell next year, but sell they will. And just as
Childs analyzed the numbers in wind tunnel sim-
ulations, companies use forecasting models and
scenario analyses to make sales projections.

When an unknown challenge is presented to us for

the first time, we try to understand its own internal
logic and the cause-effect relationships governing
it, so that we can transform the unknowns into
knowns, or at least into known unknowns – the
things “we know we do not know.” We’ll look at how
to do that next in disordered environments.

Complex operations
In 2001, Mike Burton was in charge of the Depart-
ment of Design and Construction, the agency re-
sponsible for most public buildings in New York
City. When he got news of the attacks, he headed
to Ground Zero. He was two blocks away when

no. 159 | IESE Business School Insight | 65

KNOW Lessons from 9/11: Operations in times of crisis

the first tower collapsed. By noon, he had begun In a custom program we carried out on IESE’s New
to mobilize a team of engineers and contractors; by York campus, we had the privilege of being able to
evening, they were walking the disaster site. Burton invite Lou Mendes, Mike Burton’s right-hand man
ended up managing the clean-up of Ground Zero, during that incredible project. He helped us under-
one of the most complex debris removal opera- stand that in this type of complex project, there is
tions in history. no master plan. There’s an objective, and within
that, each and every one of the participants must
Unlike a normal debris removal project (that is to improvise, adapting their response to achieve the
say, one that would be complicated), the buildings goal at all costs. As our dear, late colleague, Josep
had collapsed like a house of cards in an uncon- Riverola, would say, “Don’t bring me problems,
trolled way. In addition, the remains of nearly 3,000 bring me solutions.”
people had to be recovered. Burton called on four
construction companies he had worked with be- By May 2002, the job was finished – under bud-
fore and so had trusted relationships with them – a get, ahead of schedule and, most important, with
crucial factor for complex operations. A job of this no lives lost. What can we learn from Burton for
magnitude meant only the best professionals in the managing complex projects? Professional teams
country need apply. They divided the area into four (never tackle a complex project with newbies); re-
quadrants and the teams met together at the end of lationships based on trust; the use of prototypes
each 12-hour shift to share what each was discover- to probe the reaction of the system; clear objec-
ing and to decide what new action to take. tives, with continuous evaluation and the ability
to pivot: These are the ingredients for success in
In complex situations, Snowden recommends pro- a complex world.
ceeding through a process of trial-and-error – prob-
ing, making an assessment and, based on this, taking Managing chaos
action. As each new action reveals its effectiveness, Unfortunately, none of the rules applied on Sep-
we adjust our way and new practices emerge. tember 11, 2001. Dr. Antonio Dajer will never for-
get that day. He was the only emergency physician
On one occasion, a machine operator felt the on duty at the hospital closest to the World Trade
ground vibrate and, raising the alarm, work Center. Because the World Trade Center had been
stopped on the entire site. Later it was found that attacked once before, in 1993, when terrorists deto-
a retaining wall of the Hudson River was about to nated a bomb in an underground garage, New York
give way and flood all of Ground Zero and much City had developed contingency plans in the event
of the city’s subway. Having sensed the problem, of a future attack – although Dajer’s smaller com-
engineers were able to secure the wall and avert munity hospital was envisaged as playing a backup
another disaster. role, supporting the larger hospitals, not being in
the eye of the storm.

Still, the previous years’ disaster drills enabled the

hospital to spring into action. Within minutes of the
towers being hit, they sounded Code Yellow. Dajer
suspended all scheduled operations and began free-
ing up beds. A surgeon who started his day thinking
he was going to perform cosmetic surgery instead
found himself assisting in ER. The cafeteria was con-
verted into a field hospital like in a war zone.
This highlights that, even in the midst of chaos,
there are still some available practices to draw
upon. While you cannot exactly plan for chaos, you
can at least prepare. So, even though New York’s
most radical disaster plan had never envisaged a
scenario like 9/11, those doctors were still able to
pivot in an emergency.

In these situations, there is no time to test or ana-

lyze. You have to act first, and after doing so, decide
whether to change course. You have to keep mov-
ing, and move quickly. In doing so, you are begin-
ning to place constraints on the chaos.

Although you must rely heavily on team knowledge

and mutual support, decisions cannot be made
collegially, because there’s no time for it. The per-
son in charge must step up and decide. Two situa-
tions exemplify this.

When the first tower collapsed, a massive dust

cloud rolled toward the hospital. Dajer quickly or-
dered the doors shut before the entire hospital was
engulfed and contaminated with dust. But then he
saw the hands pressing against the glass outside,
imploring to be let in, and he realized he had to
open the doors and look for another quick solution
to keep the operating rooms sterile.

no. 159 | IESE Business School Insight | 67

KNOW Lessons from 9/11: Operations in times of crisis

Check your readiness for disaster

Given the COVID-19 pandemic, sociopolitical upheavals, technological

disruptions and other ongoing VUCA challenges happening around the
globe, we think 9/11 and Snowden’s Cynefin framework provide many
practical and necessary lessons that business leaders could apply
today. Ask yourself:

What are the clear, complicated, How are your information flows?
complex and chaotic situations your 9/11 illustrated the tragic consequences
organization currently faces? Do you of what can happen when different
have the right teams in place, with the departments do not share critical pieces
right mindsets and skillsets, to handle of information that would have saved lives
these extraordinary situations? and benefited the whole organization. Flat
and connected communication systems
How well do you sense the are key to help ensure decision-makers at
environment? What’s the status of your all levels have access to information and
organization’s “human sensor network” are empowered to act on critical signals.
that pays attention to, and reports, weak
signals? Sensing the environment is key How responsive and adaptive are your
to anticipating the kinds of problems organizational processes? Especially
(complex, complicated, clear and/or in dynamic environments, managers need
chaotic) you might be facing. Whether 9/11 to have nimble processes in place to
or COVID-19, history proves the signs are regularly assess what’s working, what the
there – if you are paying attention. organization is learning and what needs to
improve. Chaotic and complex challenges
How are you checking assumptions, are constantly evolving, so leaders need
biases and blind spots? We all tend to be continuously monitoring the impact
to see things our own way. Engineers of their decisions and stress-testing their
may pick up on linear patterns and strategies by considering best- and worst-
cause-and-effect relationships, while case scenarios, seeking alternatives,
designers may see non-linear aspects and allowing contingencies, and iterating in
interdependent systems. Organizations light of changing circumstances.
need both perspectives. How many
different voices are represented around Finally: What might you do better
your table? What can you do to amplify or differently to best align your
and sharpen the lenses by which you view challenges with appropriate
the world? responses?

68 | IESE Business School Insight | no. 159

 The authors
In another instance, the mayor of New York went
to survey the damage at the World Trade Center. Federico Sabria is a professor of
When he arrived at the scene, he asked the fire Production, Technology & Oper-
chief if it were possible to get rescuers up to the ations Management at IESE and a
consultant in the field of logistics. A
top of the tower to help people who were trapped Fulbright Scholar, he holds a PhD in
up there, and the fire chief said no, he could never engineering from the University of
put one of his men above the fire. California, Berkeley.

This encapsulates another important lesson for

chaotic situations: Although many rules commonly
used to control operations may have to be violated, Alejandro Lago is a professor and
there still need to be a few ground rules that cannot head of the Production, Technol-
ogy & Operations Management
be broken. Even in the worst case scenario, there Department at IESE. He holds a PhD
must be some red lines that cannot be crossed; it in engineering from the University of
cannot be “anything goes.” Discerning which rules California, Berkeley, where he was a
Gordon F. Newell Fellow.
can and should be broken and which ones cannot
and should not is the hallmark of leadership.

In the final analysis, New York City gave the world

a great lesson in how to react to a catastrophe of Fred Krawchuk is a senior lecturer
of Production, Technology and
unimaginable proportions. They demonstrated
Operations Management at IESE, as
how professionalism and a sense of duty and sac- well as an executive coach, writer
rifice enabled them to manage that fateful day, to and CEO of the Pathfinder Con-
sulting Group. A graduate of West
save lives and, later, to transform Ground Zero into
Point, IESE and the Harvard Kennedy
what it is today: a symbol of resilience that rep- School, he is a decorated veteran
resents the best of this vibrant city. U.S. Army Special Forces Colonel,
having led high-risk operations
around the globe, from the Balkans
As Dr. Dajer later recalled: “I think my big takeaway to Iraq and Afghanistan.
from 9/11 is that if you give trained (professionals)
clear direction and adequate resources, they will
self-organize and do a very impressive job. Every-
one remembers the feeling in New York City that
day. There was so much solidarity throughout the
city and the country. We were so together. And
source:This article is based on Executive Education
there was a tenderness there – a compassion that sessions delivered by the authors on this topic, as
we felt for each other that I would like the world well as a special talk delivered by Prof. Federico
Sabria at the National September 11 Memorial and
to have. It just goes to show what people really can Museum in New York City on October 11, 2018, as part
do when they rise to the occasion.” of IESE’s Global Alumni Reunion.

no. 159 | IESE Business School Insight | 69

Thinking
out of
the box
When the
product offer
isn’t clear,
change the way
people think
about it.
Redondo
illustrations :

70 | IESE Business School Insight | no. 159

 In conversation with
Romain Boulongne
Assistant Professor of Strategic
Management at IESE Business School

W
hat – or perhaps more to How did this lead you to study “categorization
the point, how – is your tar- processes”?
get audience thinking about In psychology literature, two main approaches are
your products? It was while used to make sense of difficult or ambiguous offer-
researching a French public ings. The primary approach is the baseline: relating
investment bank for his dissertation that Romain an offering to an existing prototype. That’s the eas-
Boulongne began delving into the cognitive pro- iest approach; we do it almost automatically. But
cesses at work in people’s minds when faced with what happens when there’s no prototype? That’s
ambiguous product offerings. In trying to figure out when we try the second approach: relating the ex-
why uptake for a new loan product was so disap- isting offering to some ad-hoc or specific goal. This
pointing, he turned to psychology research on “cat- can dramatically change the way we think.
egorization processes,” yielding practical insights
for business strategists into how best to prime and Let me give you an example. Think of a bird. What’s
prompt audiences so that ambiguous offerings are the first image that pops to mind? Usually, people
communicated and understood with greater clarity will say a robin or a pigeon. But why not a chick-
– and potentially greater social impact. en? As many psychology studies have shown, hu-
man beings tend to think of a bird’s most defining
Tell us how you got started with your research. or prototypical characteristics first. So, flying is a
For my PhD research, I wanted to continue to work quintessentially bird thing to do, and chickens are
on urban economic development, especially aimed pretty terrible at flying. That’s the baseline.
at socioeconomically deprived areas, then official-
ly known as zones urbaines sensibles (ZUS), now- Now what happens if I give you a goal prompt?
adays termed quartier prioritaire (QP) or quartier Think of what you might have for dinner while
prioritaire de la politique de la ville (QPV). Many of you are thinking of a bird. That’s when a chicken is
these disadvantaged areas are disproportionally more likely to register.
made up of immigrants who often face religious
and racial discrimination. You see this in some of Having a goal in mind can take us down a differ-
Paris’s poorer banlieues (suburbs). So, I partnered ent cognitive path. “Eating” can prompt us to think
with a public investment bank in France that had a about some secondary characteristics. And that is
real business problem: It had launched a promising why goal priming can be extremely useful in busi-
new loan product aimed at entrepreneurs in dis- ness strategy and innovation, particularly when it
advantaged areas. However, there were few takers. comes to putting forward ambiguous offerings.
To figure out why, I had to take a step back. Why
was this financial offering not reaching its target We saw this with smartphones. When the smart-
audience? People understood loans and interest phone first came out, it was initially hard for cus-
rates, so what was it about this new product that tomers to grasp what it was because there was no
made it more difficult for people to understand? preexisting category for it. But by activating the

no. 159 | IESE Business School Insight | 71

KNOW Thinking out of the box

Using a
goal prompt
idea of a goal – thinking about what we can do with
a smartphone, like watching videos or using a map

can activate
for directions – suddenly what would be consid-
ered weird in one category can be evaluated and

a new way
accepted differently in another.

Tell us how you tested prototyping and goal

priming in your paper “Evaluating ambiguous
offerings.”
of thinking
My co-author and I conducted six experiments.
Through these experiments, we found that, with Alexa. What is it? A virtual assistant that looks like a
a clear-cut offering, it’s better to activate proto- speaker? Or a way of listening to songs while cook-
type-based categorization and it’s detrimental to ing? Framed that way, Alexa makes more sense.
activate goal-based categorization. And vice versa:
If an offering spans categories, is hard to classify What the goal prompts really do is relax the base-
or is ambiguous, then to get higher evaluations, it’s line assumptions that customers tend to rely on
always better to prime audiences with a goal. first and move them to another mental model.
With the smartphone, using a goal prompt of
Our findings hold up in the realm of financial prod- watching movies is different enough from the pro-
ucts (our original problem) as well as in the realm totype to activate a new cognitive process or a new
of a consumer product like a smartphone with way of thinking.
more or less ambiguous features. For example, we
ran an experiment using smartphones with a fixed Who is this research most useful for?
processor speed (clear-cut) and variable speeds There’s obviously something here for marketers,
(ambiguous) and found that participants who were but more broadly it raises questions of strategy,
primed to think of how they would watch movies including how to manage different product portfo-
on the go (a goal) ended up giving higher evalu- lios, how to introduce new products into markets,
ations to the variable-speed phone. Meanwhile, how to communicate to stakeholders and the key
those who were primed with a prototype gave high- messages you want to put forward. When we dive
er evaluations to the clear-cut offering. into how customers or other stakeholders make
sense of a firm or its core products, we can devise
Why is that? strategies that lead to better evaluations.
Prototype-based categorization is easiest for
us because we map what we are evaluating with What next?
something already stored in our minds. So, if we I’m currently looking at a third well-researched
are evaluating a movie or a wine, if we know the way to prime audiences: via analogy, using com-
category (genre or varietal), we know what to ex- parisons to activate more favorable evaluations
pect. And we tend to reward products that meet in products that are in the sweet spot of being
our expectations. neither too novel nor too familiar. For example,
when Lime launched its electric-scooter service
But when customers start to evaluate something in European cities, they presented themselves as
ambiguous, thinking of a prototype is confusing. “the Uber of scooters” to generate an analogy be-
They may react negatively just because of that. In tween a well-known app-based transport service
these cases, priming with a goal activates another and themselves. For this paper, we present a mod-
cognitive mechanism that puts offerings in a more el to map which prompts work best in different
favorable light. Take another example: Amazon’s circumstances. In short, we recommend priming

72 | IESE Business School Insight | no. 159

 Takeaways
audiences with prototypes for classic products,
analogies for semi-novel ones, and goals for novel How are your audiences thinking?
or ambiguous ones (see takeaways). Bear these in mind:

Going back to the bank, what did they make of Prototype prompts are the
your findings? least taxing and most frequently
They found them very helpful as a way to reframe used. Employ this baseline when
their offerings. I should note that I continue to a product doesn’t deviate far from
collaborate with them, including in research on expectations.
impact investing, which is about, from the inves-
tor’s perspective, making both social and financial Goal prompts are the most taxing
impact. In our case, we look at impact investing in mentally and they backfire when
France’s most disadvantaged areas that have been used inappropriately. In fact, goal
underserved or discriminated against, and we in- prompts lead to significantly lower
vestigate whether financing ventures in these zones evaluations if the offering would
brings about more positive impact per euro invest- have been easy to grasp without
ed. We find that granting loans to firms based in them. For higher evaluations,
disadvantaged areas, compared with investing in employ goal prompts that are
otherwise similar ventures in wealthier areas of the intentionally distinct from the
very same cities, leads to more and better jobs, and baseline when a product is
also greater relative financial performance. unknown or hard to make sense of.

With our findings, we hope to encourage more Analogy prompts (comparisons

lending and investments in disadvantaged urban to something familiar) garner
areas where many ventures have been overlooked the highest evaluations for
by traditional financial institutions. This is in line intermediately novel offerings,
with work by my IESE colleagues Pascual Berrone and that combination is optimal
and Joan Enric Ricart, who look at the importance compared with any prompts for
of financing for sustainable urban development in either non-novel or very novel
their Cities in Motion project. It also contributes offerings.
to research on social inclusion and investment, an
area investigated by another IESE colleague, Samp-
sa Samila, who looks at the positive interplay be-
tween venture capital and ethnic diversity.

How does this relate to your work on categoriza- read more: “Evaluating ambiguous offerings” by
Romain Boulongne and Rodolphe Durand is published
tion processes and ambiguity?
in Organization Science (2021). Boulongne also has these
Apart from the involvement of the bank, it doesn’t papers in the works: “Impact investing and the fostering
relate exactly, yet the lines of research are related of business ventures’ financial performance and social
impact in disadvantaged urban areas” and “Strategizing
in my mind by the fact that the impact investing categorization processes to the firm’s advantage.”
research looks at firms that are located at the pe-
riphery – literally – and consequently face discrim-
ination from external evaluators. They are not the
prototypical firms you would expect, and they are
stigmatized. I hope my research will help to rem-
edy that.

no. 159 | IESE Business School Insight | 73

4 principles
to manage
your career for
the long term
By Dorie Clark

Just as CEOs jeopardize long-term growth by only

focusing on quarterly profits, we risk falling into the
same trap in our personal and professional lives.
Follow these tips to break the short-term orientation,
see the big picture, and tap into the power of small
changes to transform your life and career.
 Raúl Arias
illustrations :

no. 159 | IESE Business School Insight | 75

KNOW 4 principles to manage your career for the long term

W
e all know it’s advantageous 1. Expand your horizons
to be a long-term thinker. Af- One of the forces shaping our career decisions
ter all, we see the mayhem is the approval of others. When our professional
that results from short-term choices earn nods and accolades from people in
mindsets, from companies our field or industry whom we respect, it gives us
failing to innovate (Kodak) to leaders who are an immediate sense of validation. That’s great, but
incentivized to cut corners to hit their numbers the danger of only ever doing this is that it leads
(Wells Fargo). The lure of short-term thinking may to short-term payoffs, rather than achieving our
be more visible at the corporate level, but it’s just long-term ambitions. We have to make a conscious
as perilous in our own lives and careers. choice to take the long-term view.

Over the past several years, I’ve researched the A few years ago, I met T.J. Wagner. After serving in
question of how to embrace strategic thinking in a the U.S. Army for over seven years, he decided to
world that so often pushes us toward instant grat- do an MBA at IESE. Between leaving the military
ification and immediate results. Resisting the easy and starting his MBA, he had nine months to spare.
lure of likes and retweets requires leaning into the Transactional, short-term thinking would tell him
hard choices. I suggest some principles for long- to use that time to do a corporate internship so he
range success in my new book The Long Game: could bolster his résumé and build connections
How to Be a Long-Term Thinker in a Short-Term before business school.
World. Here are four of my favorites, which I hope
can be helpful to you as you chart your career path. But he did something different: He went off and
learned to sail in Malaysia and Thailand. After pass-
ing his skipper exam and getting his license, he
spent the summer skippering yachts in Croatia and
Greece. Some might view this as frivolous: How is

We have this going to help you right here, right now? But
sailing didn’t become a sidenote: At IESE, he took

to make a the initiative and became head of the school’s sail-

ing club. Over the course of his two years at IESE,

conscious
he teased out the racers like him hidden among
the class ranks and engaged in team-building with

choice to take
internationally diverse crews. He built long-lasting
relationships with alumni and peers from sailing

the long-term
clubs at other business schools whom he met at
European regattas.

view When it comes to relationship building, most of

us are good at short-term networking, but how of-
ten do we engage in “infinite horizon” networking

76 | IESE Business School Insight | no. 159

– consciously putting ourselves in places where we
are exposed to ideas and possibilities that never
would have arisen otherwise?

Why not write down at least two specific ways

that you might personally expand your “infinite
horizon” circle? Perhaps it’s getting involved in an
alumni association, cohosting a dinner or virtual
cocktails with a friend in a different industry, re-
connecting with a long-ago friend, or attending an
ideas conference. These creative bets may take a
while to pay off but such relationships and involve-
ments can be the most transformative.

no. 159 | IESE Business School Insight | 77

KNOW 4 principles to manage your career for the long term

You should devote a fifth of your

time to new, experimental ideas that
may not pan out but could be vastly
rewarding if they do
2. Carve out 20% time
One of the reasons we hesitate to take chances or
explore new avenues in our professional lives is
that, so often, the conversation around reinvention
is all or nothing. In writing my first book, Reinvent-
ing You, I came to realize how pernicious this im-
plicit frame is. It prevents many people from tak-
ing action because, quite sensibly, they are wary of
“taking the plunge,” “leaping and the net will appear,”
or any other potentially fatal metaphor.

Instead, in The Long Game, I lay out a different

possibility: 20% time. Invented by 3M (as 15% time)
and popularized by Google in its present form, 20%
time is the idea that you should devote a fifth of
your time to new, experimental ideas that may not
pan out but could be vastly rewarding if they do.
(Google News and Gmail were two innovations
born of employees’ 20% time.)

This is a powerful idea not just for companies but

for all of us. Just as most financial advisers counsel
us to have a mix of securities to mitigate our risk,
we should do the same with our careers. Too often,
we overindex on one security (our day job), and if it
works out well, that’s great. But if it doesn’t – if we
get laid off, or our industry changes, or we some-
how get sidelined or simply decide we would rather
do something else – we are left in a precarious po-
sition. Meanwhile, if we have steadily been building
up a small part of our equity (our time and effort)
in another area, it can be a powerful hedge against
change and uncertainty, and a way to experiment
in new areas with low risk.

In The Long Game, I profile a Google employee

named Adam Ruxton who leveraged his 20% time

78 | IESE Business SchooI

School Insight | no. 159
to volunteer for a project with X, Google’s so-called
moonshot factory. Through the relationships he
built, he positioned himself to land a full-time job
with X when it needed a new marketing staffer.

Adam’s experimental time was devoted to different

projects inside his company (and that’s appropriate
if you’re working on company time). But you can
create your own 20% time carved out of nights and
weekends, and pursue entrepreneurial ambitions or
new hobbies that might yield interesting outcomes.

In my book Entrepreneurial You, I profile Lenny

Achan, a technology-obsessed nurse who, in his
free time, developed two smartphone apps. When
his boss found out about his sideline, instead of be-
ing angry as Lenny feared, he was thrilled because
he realized Lenny must be truly passionate about
emerging technology in order to invest so much of
his free time. He tapped Lenny to lead social me-
dia for the hospital, and eventually Lenny rose to In The Long Game, I explain my theory of Career
become the head of all hospital communications. Waves – namely, that there are four phases we
need to cycle through as we develop in our careers:
Thinking through how we choose to deploy our Learning, Creating, Connecting and Reaping. Each
own 20% time can lead to enormous personal is valuable and appealing, but if we get stuck for
and professional growth, as well as unforeseen too long in one phase and fail to move on, our ca-
opportunities. reer progress will always be limited.

3. Think in waves learning. Our careers start with the Learning

One of the most common problems I see in the ex- phase. Early on, we don’t have any idea about how
ecutives and entrepreneurs whom I advise is a ten- our industry works, how the business world works,
dency to keep doing what they are already good at. how to manage others and so on. Reading copi-
Of course, that makes sense: Who wants to abandon ously, taking professional development courses
a winning formula? But if you feel like you’ve hit a and absorbing lessons from mentors around us is
career plateau or you’re not advancing as fast as you paramount. Eventually, though, you need to start
feel like you should, the problem is often failing to contributing and paying it forward: It’s time to en-
recognize that it’s time for a new challenge. ter the next phase.

no. 159 | IESE Business School Insight | 79

KNOW 4 principles to manage your career for the long term

creating. In the Creating phase, you’ve developed can embark on something new and meaningful.
your own ideas and perspective. By now, you have Goldsmith himself has done this, by creating a leg-
wisdom and experience to share, so it’s incumbent acy project in which he vows to teach up-and-com-
upon you to do it, both to help others and also ing coaches everything he knows for free, with the
because it’s a way to demonstrate the value you pledge that participants will one day pay it forward.
can bring to the table. When others recognize the (I have been a part of this initiative since 2017.)
quality of your insights, you’re far more likely to
be tapped for promotions and other opportunities. All of us need to recognize the cyclical nature of
But it takes a village to build a career, which brings our professional lives. We can’t afford to rest on
us to the Connecting phase. our laurels or stagnate. Instead, it’s a continuous
process of moving forward and, as T.S. Eliot would
connecting . Building relationships may be eas- have it, “to arrive where we started and know the
ier for some (such as extroverts) than for others, place for the first time.”
but all of us have to cultivate connections with a
professional community. This helps to hone our 4. Embrace a 7-year horizon
thinking, as trusted colleagues can help us sharpen In 2011, Amazon’s Jeff Bezos told Wired magazine,
our ideas and identify the most promising ones “If everything you do needs to work on a three-
to follow. They can also help amplify those ideas, year time horizon, then you’re competing against
serving as our ambassadors. a lot of people. But if you’re willing to invest on
a seven-year time horizon, you’re now competing
reaping. On the surface, it might seem like Reap- against a fraction of those people, because very few
ing is the final destination – the chance to savor companies are willing to do that. Just by lengthen-
our hard-earned success. And to a certain extent ing the time horizon, you can engage in endeavors
it is. But as the legendary executive coach Marshall that you could never otherwise pursue.” Such en-
Goldsmith told me, “[People will say] ‘I used to be deavors include Alexa and Amazon Web Services,
the CEO. I used to be the football star.’ You can’t which took time to develop and achieve scale.
ever be happy in life with a thing that used to be.”
To combat this, you have to keep reinventing your- The same is true in our own careers. We have all
self, to circle back to the Learning phase, so you heard a million times that success never happens

80 | IESE Business School Insight | no. 159

 The author

Dorie Clark has been named one

of the Top 50 business thinkers in
the world by Thinkers50, and was
recognized as the #1 Communication
Coach in the world by the Marshall
Goldsmith Leading Global Coaches
overnight, but we have no clarity about how long Awards. A consultant and keynote
speaker, she teaches executive
it does take, so we risk becoming frustrated and
education at Duke University’s Fuqua
quitting too soon when things don’t materialize in School of Business and Columbia
short order. If we can be diligent about investigat- Business School.
ing what success in a given realm actually takes (at
least on average), then we will have far more real-
istic expectations to measure our progress against.
Coupling this with the patience to wait for results,
sometimes for years, is a powerful combination.

As venerable as long-term thinking is, it’s rare- read more:This article is adapted from Dorie Clark’s new
book The Long Game: How to Be a Long-Term Thinker
ly practiced in our society; the pressures against
in a Short-Term World (Harvard Business Review Press,
it are great. Yet by cultivating the discipline to go September 2021). Learn more and download your free
your own way, experiment fearlessly, embrace risk Long Game strategic thinking self-assessment at
https://dorieclark.com/longgame.
(but not too much) and expand your time horizon,
you will make yourself invaluable to others – and From her website you can also find out more about
have the opportunity to create the career and life her previous books: Entrepreneurial You (2017), a
blueprint for monetizing your expertise to become an
you want. independent professional; Stand Out (2015), on finding
your breakthrough idea and building a following around
it; and Reinventing You (2013), on how to develop a
compelling personal brand.

IESE alumni can access her webinar “Reinventing you:

What to do when it does not work out,” delivered in
April 2021 as part of the Career Management Series.

no. 159 | IESE Business School Insight | 81

FULL STOP
Managing
stress before
it manages you
COVID-19 has raised all our stress levels,
but what can we do? Follow these tips
to stop stress from overwhelming you
and your teams, and strengthen your
collective resilience.

Anna Semenchenko
illustrations :

82 | IESE Business School Insight | no. 159

 However, COVID-19 has proved challenging even
for those executives who traditionally remain on
top of it all. According to a study in the European
Journal of Psychotraumatology, this may be due
to them being forced to perform “illegitimate
tasks.” These are tasks we consider to be outside
the scope of our professional role or at odds with
our level of experience, expertise or authority. The
2020 study found that an increase in such tasks
during COVID-19 raised levels of distress, anxi-
ety and depression among managers and was a
predictor for identifying managers vulnerable to
mental health issues. A significant correlation was

H
also found between the degree of downsizing an
organization went through during COVID-19 and
eadaches, insomnia, lack of symptoms of stress among managers at the high-
concentration, feelings of anx- est level (board members).
iousness. Noticed any of these
symptoms of stress lately? If so, Other risk factors predicting stress are age, rela-
you’re not alone. According to Dr. tive income and work status. “Stress tends to occur
Jorge Pla Vidal, a specialist in psychiatry at the more between the ages of 40 and 50,” says Belo-
Clínica Universidad de Navarra in Spain, stress is qui. “That’s generally when people feel overloaded,
the colloquial way we refer to the heightened state both at work, where professionals are busy building
of alertness, vigilance and preparation we feel in their careers, and at home, where children still re-
adverse life situations. And with the ongoing pan- quire a lot of their parents’ attention.”
demic – a situation on the extreme end of the
adversity scale – many have become vulnerable, This chimes with research that people’s happiness
especially those in positions of responsibility and forms a U shape over their lifetime, hitting its low-
management. est point in their late 40s before rebounding.

A certain amount of stress is no bad thing, says Beloqui cites a different Clínica Universidad de Na-
Pla Vidal, insofar as it generates a state that allows varra study that found stress and anxiety higher
us to face perceived threats in a better condition. among women under 40, which is precisely when
His colleague, Dr. Oscar Beloqui Ruiz, head of the many are either having children or have school-age
Check-Ups Unit at the Clínica, notes that senior children at the same time as they are taking on
executives are often quite well-prepared to man- greater responsibilities at work.
age stress because they have had time to develop
coping mechanisms over the course of their ca- Social media can also contribute to a sense of sta-
reers. Additionally, the discipline and timetabling tus anxiety, making us feel inferior relative to our
required to stay on top of their game at work can peers. Indeed, the European Journal of Psychotrau-
be applied to their personal lives, so they are more matology study found that relative income “had a
likely to eat well, go to the gym and be able to af- significant negative relationship with anxiety and
ford certain comforts that lessen the stress relative depression, suggesting that managers who are rel-
to less resourced managers. atively poorly compensated might be particularly

no. 159 | IESE Business School Insight | 83

FULL STOP Managing stress before it manages you

at risk.” This situation may be even worse in the U.S. first of its kind in Spain – to screen patients’ genet-
where there are bigger income and equality gaps ic traits and identify potential links to more than
and fewer social safety nets. 650 diseases. Armed with this information, patients
can take better care of themselves and know what
Beyond one’s personal or professional roles and re- to avoid with respect to the particular health risks
sponsibilities and the contexts in which they carry they may be predisposed to.
them out, Pla Vidal underscores that how one re-
sponds to stress ultimately has a lot to do with peo- None of this is to say that our mental health destiny
ple themselves – that is, their way of being, phys- is already written. There are plenty of things we can
ically, mentally, emotionally and even genetically. do, in addition to the tried-and-tested methods of
balancing our diets, avoiding toxic habits such as
Many diseases, including anxiety disorders and smoking or drinking too much, engaging in regular
depression, have genetic roots. Recognizing this, physical exercise and avoiding working long hours,
Beloqui’s unit launched a Genomic Checkup – the which in the end reduces effective performance.

Stress interventions
for yourself
• Seek meaning and purpose. This can
change your perspective, enabling you
to endure some temporary stress as you
envision and work toward a better future.
• Take off the rose-colored glasses. Be
more realistic, seeing things as they are,
without exaggerating or living in denial.
• Don’t be stubborn. Rigidity makes us less
resourceful.
• Be aware of cognitive distortions. Avoid • Cut down on should, must or ought.
overgeneralizing, labeling everything in These words trigger feelings of guilt
black-and-white terms or framing negative and shame when directed inward, and
events as permanent defeats. frustration when directed at others.
• Recognize your own power. Change • Actively cultivate compassion and
have to and can’t to choose to and choose gratitude. Less blaming yourself and
not to, to remind yourself that you always others. Count your blessings more.
have a choice. • Stay in the present. Listen to your body
for physical warning signs. Identify and build
on the current activities that give you the
SOURCE: “Cognitive behavioral therapy for stress relief”
by Nia Plamenova and Alberto Ribera (2020). greatest energy and joy in the here and now.

84 | IESE Business School Insight | no. 159

How one
responds to
stress has Stress
interventions
a lot to do for your team
with people
themselves • Reframe adversity. Rather than
overdramatizing a crisis, treat
uncertainty, stress and change as
The key, according to Alberto Ribera, professor of normal parts of life and work.
Managing People in Organizations and director of
• Build a culture of trust. Provide
the Coaching Unit at IESE, is to develop resilience.
Ribera – who introduced a course on stress man- a safe space where people
agement as part of IESE’s MBA program – believes won’t be punished or judged for
resilience isn’t something you’re born with, but can
be developed with the right training.
vulnerabilities.
• Make resources visible and
Pla Vidal agrees. When it comes to facing any spe- usable. Influence people’s
cific problem in life, “training usually helps.” It
starts with physical resilience, from which all other perception of the available
resilience (emotional, mental and spiritual) stems. resources, and encourage them
“You have to get enough good quality sleep,” he in-
to use those resources for viable
sists, “and that means not taking your problems to
bed with you.” solutions.
• Give people purpose. Give visibility
Since the COVID-19 pandemic, many more people
have reported “doomscrolling,” the masochistic rit-
to the contributions people are
ual of ending each day on their phone, searching making to the organization and the
for relief from their anxieties by, oddly, consuming
positive impact of their work.
more bad news. As a Wired columnist observed:
“Two hours of excess Twitter every night … will • Promote realistic optimism.
only cause burnout and a decline in mental health Nothing is completely good or bad.
among the people whose level-headedness is need-
ed most.”
Encourage others to see difficulties
as learning opportunities rather than
“Turn off digital interruptions,” advises Ribera. And as catastrophic events.
not just at night but during the day. “Unless you
need them for the meeting or task at hand, switch Continued...

no. 159 | IESE Business School Insight | 85

FULL STOP Managing stress before it manages you

“Be in the
moment. It
makes dealing
with problems
much easier”
...continued

off phones, social media, email notifications and

• Leverage social support. Show the like. A great misconception is that we are able
compassion and empathy to create to multitask. Yet studies show that dividing atten-
and maintain a sense of community, tion, including tech distractions, decreases pro-
ductivity and increases stress. Be in the moment.
so people know they’re not alone. If you focus your attention, doing one thing at a
• Reinforce communication and time, it makes dealing with a multitude of prob-
lems much easier.”
transparency. Getting everyone on
the same page is always important “Develop healthy self-awareness,” adds Pla Vidal.
but even more so when facing This means knowing your limits and not exceed-
ing them. You’re able to say no – to deadlines you
difficulties. can’t meet, to colleagues who delegate back, to
• Foster a growth mindset. the urgent things that hijack you from taking care
of what’s truly important. “With self-awareness,
Reward effort and proactivity,
you’re able to recognize the initial symptoms of
so that adversities are recast as stress and know what you need to do to renew your
opportunities for innovation and physical, emotional, mental and spiritual state, and
thereby avoid failure.”
growth.
• Celebrate successes. “It’s not about becoming superhuman,” says Ribera,
Acknowledging what is going well, “but accepting when you feel fragile, and asking for
help, if necessary, to overcome it.”
despite the challenges, gives people
a sense of control over the situation, This latter point is key. As the happiness research
indicates, we tend to rebound from the low point
creating a positive upward spiral.
of the U when we start to prioritize relationships
and connect with others. “We all need contact with
SOURCE: “Resilience,” a technical note (DPON-348-E)
others,” says Ribera. “So ask for help, whenever
by Nia Plamenova and Alberto Ribera (2020). needed, connecting with your loved ones who can
help you leave your stress behind.”

86 | IESE Business School Insight | no. 159

No pandemic Covid-19
should stop talent Scholarships

At IESE, we want to make sure that COVID-19 doesn’t

prevent promising talent from studying with us. That’s why
we’ve launched our COVID-19 Scholarship program, aimed
at young professionals interested in pursuing one of our
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in sectors hardest hit by the pandemic.

For more information: www.iese.edu/financial-aid

First steps
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