AFRICA S AWAKENING. Will the 21st century be the African century? The potential and challenge of a diverse continent ALUMNI MAGAZINE

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1 141 ALUMNI MAGAZINE April-June Carlos Sanchez-Runde Ethical Conflicts Across Cultures. Is My Culture Superior? Marc Sachon 3D Printing: the Digitalization of Manufacturing Josep Valor The Digital Era: What We ve Learned So Far AFRICA S AWAKENING Will the 21st century be the African century? The potential and challenge of a diverse continent

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3 PUBLICIDAD You shouldn t miss it! Save the date iese global alumni reunion 1 Company Visits Academic Sessions Networking activities Solidarity Run AND MUCH, MUCH MORE November 2016 Barcelona

4 C O N T E N T S COVER STORY AFRICA S AWAKENING WILL THE 21ST CENTURY BE THE AFRICAN CENTURY? 8 IDEAS U.S. ADVISORY COUNCIL ANNUAL MEETING CROSSROADS ETHICAL CONFLICTS ACROSS CULTURES Is My Culture Superior? Carlos Sanchez-Runde 18 ADDITIVE MANUFACTURING RECONFIGURES INDUSTRIAL OPERATIONS 3D Printing: The Digitalization of Manufacturing Marc Sachon 22 DECODING DISRUPTION: DIGITAL, ECONOMIC AND POLITICAL 30 DOING GOOD DOING WELL CONFERENCE Innovation for Sustainability 28 BANKING INDUSTRY Finding New Pathways to Profitability 32 PROF. PEDRO NUENO REFLECTS ON THE ROLE OF BOARDS OF DIRECTORS The Board Should Be a Gas Pedal, not a Brake 33 IESE BUSINESS ANGELS AND FAMILY OFFICES NETWORK 100 Forums Supporting Entrepreneurs 34 HOMAGE TO PROF. RAFAEL TERMES ( ) If the Banking Sector Doesn t Serve Society, It s Not Morally Justified 35 2 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

5 PROFS. MAS, PASTOR AND VIDELA EXAMINE ECONOMIC SITUATION IN 2016 Growth Expected, Albeit Moderate and Uneven 37 WOMEN IN LEADERSHIP: STRIDES TO SUCCESS The Secret Weapon Is Women 39 THE YIELDS OF THE YOUNG TALENT PROGRAM Now It s Our Turn to Give Back What Society Has Given Us 40 AGENDA 41 PEOPLE RESEARCH EXCELLENCE AWARDS Professors Making an Impact 46 PEOPLE CRISTINA DE PARIAS (MBA 91) DELEGATION LETS YOU GET THE BEST OUT OF EACH TEAM MEMBER JAIME CARUANA, GENERAL MANAGER OF THE BANK FOR INTERNATIONAL SETTLEMENTS An Economy in Transition DANIEL FRANKLIN, EXECUTIVE EDITOR OF THE ECONOMIST The Dominant Dozen 49 PEP GARCIA (MBA 91), FOUNDER OF MAXCHIEF The Entire World Is Our Playing Field 50 THE VILALTA FAMILY: STRENGTH IN NUMBERS We Speak the Same Language As IESE 51 AUTHORS 52 IESE & YOU GOVERNING BOARD OF THE ALUMNI ASSOCIATION A MORE INTERACTIVE, GLOBAL ASSOCIATION 62 LIFE CHAPTER NEWS 54 EXECUTIVE EDUCATION GRADUATIONS 61 LAST WORD JOSEP VALOR The Digital Era: What We ve Learned So Far 64 Alumni Magazine IESE APRIL-JUNE 2016 / No

6 ALUMNI MAGAZINE 141 April-June General Circulation 40,869 Spanish Edition: 33,194 English Edition: 7,675 Index of Companies Academy of International Business...46 Acciona...38 AESE...8 Airbus...22 Almirall...54 Alpha Consulting...60 ALSA...54 Amadeus...37 Amazon...22 American Management Association...30 Android...64 Angola School of Management...8 Apple...64 Argentaria...42 AstraZeneca...60 Atom...42 Atrevia...26 B Corp Europe...28 Baker Hughes...39 Banco de España...32 Banco Popular...32 Banco Sabadell...32 Banco Santander...32 Banesto...42 Bank for International Settlements (BIS)...47 Bankia...32 Bankinter...32 BBC...8 BBVA...32 BDO East Africa...8 Blackberry...64 BMW...22 BNP Paribas...39 Boeing...22 BP...39 Bridges Ventures...28 British Airways...26 CaixaBank...28 CatalunyaCaixa...42 CBS...30 CEIBS...8 CEPSA...38 Chair Centre Group...8 Channel Thirteen...30 Citi...54 Citibank...8 Columbia Business School...54 Comercial Mexicana...38 Constellate Global...28 Coursera...28 Daimler-Chrysler...26 Debuencafé...54 Numbers refer to the first page of the article in which the alumnus appears. Index of Alumni Ah Chip, Clifford (GEMBA 14)...8 Alegre, José Ramón (PMD 08) Awosika, Ibukun (GEMBA 04 and GCP 13)...8 Bagudà, Josep Maria (MBA 99) Balsells, Jordi (PDG 10) Becerril, Carmen (PADE 00) Beltrán, Alejandro (MBA 98) Bouza, Jaime (PDD 05) Boza, Jordi (PDD 03) Buch, José (MBA 06) Chibesa, Esther Macharia (AMP Pan African 16)...8 Daniels, Chris (MBA 00) De Parias, Cristina (MBA 91) Domínguez, Luis (PDG 09) Eigenbrod, Nils (MBA 16)...8 Esteve, Antoni (PDD 87 and GCP 13) García Paramés, Francisco (MBA 89) Garcia, Pep (MBA 91) Gómez Martín, Francisco (PDG 03) Gómez, Claudia (MBA 07) Gomides, Andréia (PMD Brazil 15) Deloitte...38 Desigual...60 DHL...22 Direct Line...60 DiRienzo Consulting...30 Dudalina...54 Durcorit...51 ECB (European Central Bank)...32 El Dorado Capital...30 EOS...22 Eurofragance...60 European Foundation for Management Development (EFMD)...8 EY...32, 54 Forbes...28 Foster Farms...30 Fuel Freedom Foundation...8 Gartner...22 Gas Natural Fenosa...38 GE...22 Geely-Volvo...26 General Motors-Fiat...26 Gestamp...36 Glazen Urban...30 Google...64 Grupo Intercom...40 GS Harvard Business School...33 Health Security Associates...54 HKUST Business School...39 Holaluz.com...39 Hulu...64 Hybrid Air Vehicles...54 IBM...60 Institución Futuro...60 Isdin...60 JP Morgan Chase...30 Kellogg School of Management...36 Kenia Airways...8 Kodak...64 Lagos Business School...8 Lending Club...64 London Business School...40 Maersk Line...22 Mango...51 Maxchief Europe...50 MDE Business School...8 Microsoft...30 MIT Sloan School of Management...54 MoDe...8 Nestlé...64 Netflix...64 González-Barros, Antonio (PADE 01) Goñi, Belén (MBA 93) Granados, Alberto (PDD 03) Gutiérrez-Jodra, Luis (EMBA 99) Huete, Álvaro (EMBA 92) Kaminski, Marek (AMP 08) Kestens, Ariel (GEMBA 09) Kindert, Gabriella (AMP 13) Krantz, Randall (MBA 02) Lambert de Rouvroit, Axel (MBA 01) Levy, Jan (MBA 01) Lopetegui, Gustavo (MBA 86) Macdougall, Vanessa (MBA 17) Maroto, Luis (MBA 89) Martín Cabiedes, Luis (MBA 85) Moseguí, Marta (PDD 09) Munilla, Miguel (PDD 04) Muñoz, Natalia (EMBA 13) N Guessan, Marie Noelle (MBA 12 and IFP 12)...8 Naya, Juan (MBA 00) Njenga, George (IFP 05)...8 Ojo, Temidayo (MBA 16)...8 Omondi, Thomas (GEMBA 16)...8 Oriaikhi, Eghosa (GEMBA 13) Numbers refer to the first page of the article in which the alumnus appears. Niumba...40 Notre Dame University...30 Olapic...26 OppCAP...30 Oxyon...60 Partnership for New York City...30 Penske Media Corporation (PMC)...30 PricewaterhouseCoopers...30 Prime Policy Group...30 Privalia...51 ProMéxico...54 Remote Eye...54 Repsol...38 Roland Berger...36 Rolls-Royce...22 Rösler International...60 Sagaci Research...8 Scottrade...30 Serhs Tourism & Hotels...60 Simple...42 Slack...49 Smart Hydro Power...54 Société Générale...60 Solvay...28 Sorbonne...42 Spotify...64 Sprint...60 Stelac Advisory Services...30 Strategy&...30 Strathmore Business School...8 Strathmore University...8 Swield Advisory & Services...54 Técnicas Reunidas...38 Temenos...28 Tesla...28 The Wharton School...54 Three Hands...28 TiVo...30 Trip Advisor...40 Tuck School of Business...36 Uber...22 Unilever...28 Universidad de Sevilla...42 University of Chicago Booth School of Business...54 Venmo...49 Vodafone...8 Wallapop...40 Webvan...64 World Bank...8 Würth...54 XP Investimentos...54 Yale School of Management...54 Palchik, Arina (MBA 12) Perrier-Châtelain, Gloria (EMBA 93) Pi, Carlota (EMBA 09) Quiaoit, Noel (MBA 16) Raventós, María del Mar (PADE 01) Rayo, Mónica (PDD 06) Recoder, Eduardo (MBA 97) Rof, Juan Sancho (PADE 76) Sanjosé, Joan (PDD 13) Scapusio, Hernán (PDD 06) Sendagorta, Jorge (PADE 90) Simonato, Rodrigo (PMD Brazil 15) Solé, Roger (AMP Brasil 06) Terlica, João (MBA 05)...8 Tiraboschi, Daniel (AMP Brazil 15) Titonis, Athanasios (AMP 13) Vastert, Jelle (MBA 09) Vieira, Rafael (AMP Brazil 15) Vilalta, Germán (MBA 82) Vilalta, Isabel (EMBA 17) Vilalta, Miguel (MBA 14) Villaseca, Rafael (MBA 76) Wanjagi, James (IFP 15)...8 Ybarra, Paco (MBA 87) Editorial Director Emeritus Antonio Argandoña Managing Director Aïda Rueda Managing Editor Maria Subarroca Editor Ana Galán Senior Editor, English Edition Sally Davies Contributors Cristina Aced Tima Batstone Carles M. Canals Mercedes Castelló Edu Ferrer Alcover Joan Antoni Guerrero Alejandro Lavara Marcella Moohan Javier Pampliega Steve Tallantyre Gemma Tonijuan Miquel Utset Photography Javier Arias Jordi Estruch Edu Ferrer Alcover Ismael Martínez Soumen Nath Sergio Selman Marion Vogel Illustrations Luciano Lozano Martín Tognola Ana Yael Design and Layout Enric J. Gisbert Proofreader Mary Brennan Advertising M&N Consulting - Antonio Moré Tel: Printing QP Print Published by IESE Business School University of Navarra Depósito legal B ISSN 1138/2333 The opinions expressed in the articles published in this magazine are solely those of the authors. Articles may be reproduced, provided that the original source is indicated. IESE/University of Navarra Alumni Magazine Avda. Pearson, Barcelona Tel: Fax: Cno. del Cerro del Águila, 3 Ctra. de Castilla, km 5, Madrid Tel: Fax: APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

7 It is one thing to say that our work is PRO professionals And another thing to make it so: Account Expansión PUBLICIDAD Plus Issuance date: March 2016 Conditions revisable in accordance with market evolution. The conditions applicable are those in effect in the bank at the time of execution % + 3% APR administration and maintenance fees minimum return (5 euros and up to 50 euros a month) on main bills direct debited and on purchases made using a credit card in food stores. (1) of payment in the account of around the first 10,000 euros if the balance on savings-investment is higher than 30,000 euros. (2) Call us on , identify yourself as a member of your collective, we ll arrange a meeting and get down to work. bancosabadell.com Cuenta Expansión Plus account is exclusive to certain professional groups. Please ask your relationship manager for information on the financial solution for your group. 1. Direct debits, the issuers of which are non governmental organisations (NGO) registered at the Spanish Aid Agency, and debits from schools, day nurseries and universities charged during the month. They must be Spanish educational centres (public, private and State subsidised) and exclude the costs of private academies, professional associations, or non-related schooling costs. Costs related to postgraduate, masters and PhD courses are not included either. Purchases made using a credit card are included in the liquidation for the month with Classic, Gold, Premium, Platinum and Gold Shopping, whose contract is associated to this account, in the food stores included, which can be consulted on the Banco Sabadell website: 2. To be entitled to these payments the account holders must have an average monthly balance with the bank higher than 30,000 euros in resources, calculated as the total of the previous month s balance of: sight deposits, deposits, fixed income at maturity, life-savings insurance, marketable and non marketable securities, pension plans, EPSV and BS Fondo Gran Selección plans. The current balance of the Expansión Account Plus will not be included in the calculation, or any other account with similar characteristics of which the account holders are intervening parties. The number of co-holders will be taken into account, for which reason the required minimum existing balance at the entity will be calculated proportionally to each co-holder. No repayments will be made during the first month of opening the Expansión Account Plus. variable name="ts_saltolinea"if the account holders are unable to reach the minimum balance which gives them the right to repayment in the Expansión Account Plus, the liquidation will be carried out at 0% for this concept. Return: for daily bank balances that exceed euros: 0% NIR. For daily bank balances from 0 to a maximum of euros: 2.919% NIR, % APR (calculated considering two interest rate types based on the constancy and permanency of the average balance during a full year. Example of liquidation in one year: account balance of 15,000 euros daily, daily remunerated balance euros; frequency 12 (monthly); liquidated interest in the year: euros. Offer valid from October 2015, with either direct deposit of salary, pension or regular monthly payments of a minimum amount of euros (excluding payments the account holder makes from other Banco Sabadell accounts). Two utility bills must also be direct debited in the last two months. Capture the QR code and discover our news Professional Informa AHEEEHAPEIALCEKNHOMGFPLAIPAHEEEHA BNFFFNBPFPIDELIGJOICNDMPBPBNFFFNB FFDAKPFOGMAFBKGPBFPCDFMIOHIOFHBIB PLEMPIFFOAFIDBBDKBABOOGHHAOAFDILP KLDCBFFLBEEOHMEIEMJOIHEKICCJBADFC EFPNEKFCFGAOOGECIFPCKBLBMOIONKFIJ MFNFFFEPDOJDMKNCCDDJOIOIAHFHAEMOG APBBBPAPIALFILPIMOKGBHCEEHEEGJHHK HHHHHHHPHPHHHHPHPPHPPHPHPPPHHHHPP

8 E D I T O R I A L AFRICA IS A CHALLENGE ANTONIO ARGANDOÑA Editorial director of Alumni Magazine argandona@iese.edu I ve always been struck by the international character of IESE, even when it was a small, local school in a country that had no role in the global community. That s why I feel so comfortable with the cover story of this issue of the Alumni Magazine, Africa s Awakening. IESE s support for Africa is not the result of its newly favorable business conditions, although it s true that Africa has taken a path of fastpaced growth, which will transform the lives of its citizens. For us, Africa is a challenge. Our Mission states that we aim to train managers that will feel responsible for their workers, for their customers and suppliers, for their investors and for the society that surrounds them. Therefore IESE s Africa Initiative is a matter of consistency. We want our students and program participants to be aware of their economic, social and ethical duty to change African society, and we discuss this responsibility at length in the following pages. As usual, ethics play a big part in our discussions. Prof. Carlos Sánchez- Runde reminds us so appropriately that what is mine is not necessarily the best. Carlos example of his mother s omelet is a reminder that in the business world, we have to be open to all cultures, appreciate their strengths and resist the temptation to build barriers. And, also in Ideas, Prof. Marc Sachon takes up a more technical issue, a technological challenge for our companies: 3D printing. In Crossroads, the conference Doing Good, Doing Well urges us toward sustainability, an issue that no company can ignore; the Annual Meeting of the U.S. Advisory Council takes us out of our comfort zone; the banking industry faces historic changes. And from there we move on to remember Rafael Termes, a professor who left a deep imprint on our programs and who changed Spanish financial culture. In People, Cristina de Parias talks about the changes in the financial system, pointing to the values she encountered during the MBA program, which she completed in And day after day we have more news from our alumni in the People section. We are pleased that this section has become an ongoing conversation among fellow alumni and between alumni and IESE. Keep making the magazine work for you so it can be a way to make your stay at IESE a lasting experience. 6 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

9 SENIOR DIRECTOR, ENVIRONMENTAL SUSTAINABILITY. LEGO PUBLICIDAD TERESA RIBERA. GERD MANZ. ADIDAS GROUP. VICE PRESIDENT TECHNOLOGY INNOVATION ANNA MARIA RUGARLI. VF CORPORATION/TIMBERLAND DIRECTOR SUSTAINABILITY AND CORPORATE SOCIAL PAUL CHONG. DIRECTOR OF IBM WATSON GROUP EMEA DIRECTOR IDDRI MATTHEW YEOMANS. FOUNDER SUSTAINLY RAPHAEL BEMPORAD. FOUNDING PARTNER AND CHIEF STRATEGY OFFICER BBMG MARK WOERDE. LEMZ. CO-FOUNDER BERT VAN SON. MUD JEANS. CEO GIULIO QUAGGIOTTO. NESTA SENIOR PROGRAMME MANAGER IN INNOVATION SKILLS 7 SANDRA PINA. PARTNER QUIERO SALVAR EL MUNDO HACIENDO MARKETING THOMAS KOLSTER. MR. GOODVERTISING, AUTHOR, SPEAKER, CRITIC KOANN VIKOREN SKRZYNIARZ. CEO AND FOUNDER SUSTAINABLE BRANDS STEINAR HENSKES. BIRD CONTROL GROUP. CEO R. PAUL HERMAN. HIP (HUMAN IMPACT + PROFIT) INVESTOR. CEO + FOUNDER ANDY RIDLEY. CIRCLE ECONOMY. CEO JOAN FONTRODONA. PROFESSOR OF BUSINESS ETHICS, IESE. CBS - CENTER FOR BUSINESS IN SOCIETY HOW to tap emerging innovations to successfully scale sustainability NOW Three intense days to work on successful case studies about circular economy and sustainable innovation. Three days to reflect on COP21 s repercussions and share inspiration with passionated people who are changing the way we do business globally now. Join us. Join your peers NOW. Register using the exclusive IESE alumni s code IESEHCSB16 for a 40% off until May 1st #SB16bcn POWERED BY: ACADEMIC PARTNER: MEDIA & AFFILIATED PARTNERS: PARTNER ORGANIZATIONS: SUSTAINABLE BRANDS Professional Meetings GUEST COUNTRY: THE NETHERLANDS

10 C O V E R S T O R Y 8 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

11 AFRICA S AWAKENING Will the 21st century be the African century? The economic growth that many countries on the continent have experienced over the years has led experts to ask this question. On the ground, companies from developed countries are looking beyond business opportunities in natural resources and toward new sectors. However, African economies are still small, informal and unstable, so executives need to take precautions. Managers knowledge and values will be decisive for achieving positive outcomes and for consolidating the continent s defining leap forward in social and economic development. IESE has been committed to this goal for more than 25 years, helping to develop African business leaders. Alumni Magazine IESE APRIL-JUNE 2016 / No

12 C O V E R S T O R Y In the next 20 years, we are going to see a lot of good things come out of Africa, explained the dean of IESE, Jordi Canals, in an interview with the BBC last May. Investments are already generating new products and services in diverse markets and a major transformation is taking place in educational institutions like business schools. Because it s a growth area, we are going to learn many things about innovation in emerging markets that will have a worldwide impact, said Professor Canals. That Africa is changing is evident to managers and investors from around the world. In the last decade, the top-ten list of countries with the fastest growth has been dominated by African names like Angola, Ethiopia, Chad, Rwanda and Mozambique. It remains to be seen if this growth will continue at the same pace and if it will spread across the continent. But today, more and more companies are including Africa in their expansion strategies. In addition, their presence stands out in reports of international organizations like the World Bank. Its Doing Business 2015 report, which assesses the ease of doing business, lists five sub-saharan African countries as among those that have made the most progress in this area. However, Africa is not for everyone, and doing business on the continent involves challenges that cannot be ignored. AFRICA IS NOT A COUNTRY lalthough it seems obvious, it must be remembered that Africa is not a country but a continent a continent of massive proportions. Sub-Saharan Africa comprises 47 countries and extends over a territory larger than China, India and the U.S. combined. It has more than one billion inhabitants, a figure that could double by And its GDP of 1.6 trillion dollars is the sum of many economies that are moving at different rates and have to be analyzed separately, warned Professor Alejandro Lago in a recent article published in the IESE Insight magazine. The landscape is changing, of course. But you can t approach Africa with a handful of stats. There is huge diversity and each country has its own history, which you have to respect when doing business there, explains Marie Noelle N Guessan (MBA 12 & IFP 12), program director at MDE Business School (Côte d Ivoire), one of IESE s associated schools. One of the fundamental problems facing managers who plan to operate in Africa is the distance, be it cultural, administrative, geographical or economic, explains Professor Africa Ariño in a recent article published in IESE Insight. Of these challenges, the most difficult to overcome is the cultural divide, since it can easily go unnoticed by foreign eyes, she says. Experts agree that the only way to get to know African markets is to visit the continent. Managers are increasingly aware that a practical approach based on periodic visits to each country provides the most reliable information for outlining an internationalization strategy. Their success will depend, in large part, on their ability to calibrate the distances between markets, adds Prof. Ariño. Companies are growing as managers understand ever better which factors are most important in each region. The World Bank predicts that GDP in sub- Saharan Africa will rise by an average of 4.8 percent in 2017 Dr. Enase Okonedo, dean of Lagos Business School The continent s economy could double in size by 2030, with the resulting social advances that this would provide Alejandro Lago, IESE professor There is huge diversity and you have to respect the history of each country when doing business Marie Noelle N Guessan (MBA 12 - IFP 12), program director at MDE Business School Africa s main challenge is achieving a good degree of political and legal stability George Njenga (IFP 05), dean of Strathmore Business School 10 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

13 However, the figures available for analysis are still unreliable and hard to find. That s why it s essential to understand Africa before attempting to enter the continent. To fully understand the continent, international companies should consider cooperating and partnering with local companies rather than trying to start from scratch. The diversity and complexity of the continent are more than enough reason to find a local partner, points out N Guessan. Companies should also recruit local professionals. Professor Ariño notes that many companies choose to hire and train local managers and workers to avoid misunderstandings that hinder business. This kind of creative solution is more and more common for overcoming any kind of distance. Carefully studying the market will allow us to know if it s ready to receive our products and services, to access wealth and consumption indicators that generally don t appear in official reports, and to evaluate whether what initially seems like a barrier could become a business opportunity, she concludes. WHERE IS THE GROWTH POTENTIAL? lmacroeconomic indicators are, in large part, responsible for the enthusiasm that Africa is inspiring. Africa has the world s fastest population growth, and the World Bank predicts that GDP in sub-saharan Africa will rise by an average of 4.4 percent in 2016 and 4.8 percent in 2017, explains Enase Okonedo, dean of Lagos Business School (Nigeria), an associate of IESE. It s important to point out that although in 2013 the aggregate GDP of sub-saharan African countries was less than that of Italy or France, these economies grew an average of 4.3 percent per year from 2013 to For some analysts, these rates only reflect a very low starting point. But if they remain steady, the continent s economy could double in size by 2030, with the resulting social advances that this would provide, points out Professor Lago. But economic differences between countries are much starker than GDP differences indicate. According to Professor Ariño, For each country, it s essential to thoroughly study the informal economy, consumer wealth, income, the abundance of resources, organizational capacities and the condition of the infrastructure. This last point deserves special attention: Geographical distance is more than just physical distance. You also have to take into account access to ports, ease of travel and transport logistics, she says. In addition to being uneven, the African economy is becoming increasingly diverse. Today, natural resources represent a quarter of exports in half of the sub- Saharan countries, but the sum of transportation, tourism, telecommunications, real estate and public or financial services already accounts for 60 percent of the fastest-growing economies, says Professor Lago. It must also be considered that industry provides little added value: The jump from an agricultural economy to a fully diversified service economy is not easy, says Professor Lago. Exports have quadrupled in the last decade, but they still represent less than 3 percent of total GDP and China absorbs about 25 percent. For this reason, Professor Lago warns that African countries need to find more business partners and move past natural resources to invest in agriculture, industry and services. The success of managers will depend, in large part, on their ability to calibrate the distances between markets África Ariño, IESE professor Everything related to consumer goods is going to experience very marked growth Clifford Ah Chip (GEMBA 14), managing partner of BDO East Africa Manufacturing instead of importing is going to be essential to job growth in Africa Thomas Omondi (GEMBA 16), director of Strategy and Performance Management for Kenya Airways For many years, we haven t had everything we ve needed. And yet, millions of Nigerians have started companies Ibukun Awosika (GEMBA 04 and GCP 13), CEO of The Chair Centre Group and member of IESE IAB Alumni Magazine IESE APRIL-JUNE 2016 / No

14 C O V E R S T O R Y In fact, investor interest in Africa has been growing since Although it remains limited and rather focused on extractive industries and infrastructure, a greater diversification toward technology, industry and services can be seen. In addition, domestic investment is also growing, led by banks and IT companies. Most of Africa is very rich in resources and population. Markets are growing and access to education is improving substantially. Africa no longer relies only on exports and extractive industries. Other economic sectors, especially wholesale and retail, are growing fast, explains George Njenga (IFP 05), dean of Strathmore Business School (Kenya), an IESE-associated school. Clifford Ah Chip (GEMBA 14), managing partner of BDO East Africa, signals a similar idea. Everything related to consumer goods is going to experience very marked growth in size and volume, because there are still many people living in poverty who need basic goods, he says. There are many needs to fill, and growth potential covers diverse areas. Ah Chip explains, We see ongoing development in real estate. Today, there are entire families living in one-room houses, so the sector is going to expand and develop significantly. And finally, penetration will continue in financial services related to the consumer via cell phones and bank cards, he says. The development of infrastructure and technology also inspires great interest, according to Thomas Omondi (GEMBA 16), director of Strategy and Performance Management for Kenya Airways. Manufacturing People who come from outside expecting everything to work the way it does in their countries are simply mistaken Esther Macharia Chibesa (Pan-African AMP), head of Treasury and Trade Solutions at Citibank Kenya Middle-class consumption in Africa is still centered very much on basic needs, but it s developing João Terlica (MBA 05), managing director of Sagaci Research instead of importing, and installing call centers and technological development centers on the continent is going to be essential to job growth in the coming years, he says. An example of the interest of international companies in the African tech sector is that offered by Professor Pedro Nueno in the Vodafone Ghana case. In it, he describes the British telecom giant s 900 million euro investment in Ghana s national phone company. In addition to telecommunications, Omondi highlights the potential of the energy sector: It represents a huge opportunity for business in Africa, since penetration of the electricity market is still very small. DOORS OPEN TO ENTREPRENEURSHIP lthe growth of the middle class is another indicator that has caught the attention of Western investors. As Professor Lago outlines, The African middle class has doubled in size since 2010 and it s expected to include 250 million people in a few years. These are very significant data, but we have to take into account that they aren t comparable to Western figures, since the cutoff is set at a steady income of only 3,000 dollars a year. João Terlica (MBA 05), managing director of pan-african research company Sagaci Research, explains that it s important to define precisely what we mean by middle class in Africa. We aren t talking about people who are buying cars, he notes. It s still consumption centered very much on basic needs. But it s developing and we hope that it will continue to do so in the coming years, as production and distribution improve. In any case, this context already represents a potential two-trillion-dollar market and a sector in which many local companies are creating a niche for themselves alongside large multinationals. According to Esther Macharia Chibesa (Pan-African AMP 16), head of Treasury and Trade Solutions at Citibank Kenya, the role of entrepreneurship is key in Africa: In Kenya, for example, there is a series of measures in place to encourage the creation of new companies, like tax incentives, decreased red tape and microcredit. This allows local companies to have their own space and compete with multinationals. Some of them even lead their sectors because they also have very deep knowledge of the economy and of African consumer behavior. Ibukun Awosika (GEMBA 04 and GCP 13) is a member of IESE s International Advisory Board and CEO of the Chair Centre Group, the company she founded out of an entrepreneurial spirit that she shares with many of her compatriots. You have to understand that, for many years, we haven t had everything we ve needed. And yet, millions of Nigerians have started companies. It s like bringing something out of nothing. Now, when you have a leadership that provides an enabling environment for all of that to come alive, you can just imagine what kind of a country you ll have. If that happens, which is my hope for my country and for the rest of Africa, then I think the world is in for a major surprise, she states. 12 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

15 FIVE KEYS TO MANAGING A COMPANY IN AFRICA A study by Professor Alejandro Lago outlines five fundamental management principles for identifying and structuring opportunities in this unsteady context: 1STRATEGY: Diversity in Africa makes it essential for potential investors to research thoroughly each country of interest. Investors need to know the best locations for a manufacturing company vs. a service company. Market and goverment characteristics are important indicators. For example, Kenya, Senegal and Botswana have fewer state regulations, while Tanzania and Mozambique experience more government intervention. It s important to keep in mind freedom of the press, the independence of the judicial system, the protection of fundamental rights and freedoms, and cultural and socioeconomic proximity. 2 OPERATIONS: Most African countries have infrastructure problems related to energy and transportation, which means that companies often have to go a step further in developing operating capacities. They often have their own electricity generators, wastewater treatment systems and raw materials importation departments. Consumer and service companies tend to invest in their own distribution networks, in addition to working with local wholesalers. 3FINANCE AND RESOURCES: Local contacts and partners are a necessity for coping with regulations, obtaining authorizations and receiving financing. Few African banks offer services to the private sector, which leads citizens to seek alternative funding sources, such as family. The central role of the family creates a network of businesses in each country that control people and key resources. Unless you understand how these communities work and find the right partners, it will be very difficult to operate. Another option for entering the market is to acquire an already-established local business, but the particular characteristics of each country make it important to study these operations carefully. 4HUMAN RESOURCES: The shortage of qualified staff is one of the continent s most difficult challenges, both for simple and complex jobs. For this reason, some companies establish agreements with universities and public institutions to design their own training programs for employees. Also, the high value of local managers makes it difficult to retain them. It is therefore important to study the effectiveness of motivational factors such as extending health benefits to employees families or offering attractive professional development plans. 5 STAKEHOLDERS: Corruption is a serious problem that has a major impact throughout Africa. Governments and institutions condemn it in public but usually tolerate it in private. Faced with this problem, managers need to have patience and keep the long term in mind. Corruption tends to be a very attractive shortcut to facilitate the operations and growth of a company, but it is not the only way of doing things. Forging longterm relationships with partners and reliable customers, being transparent and understanding social norms and the role of the community are activities that require extra effort, but they strengthen the business in the long term. Alumni Magazine IESE APRIL-JUNE 2016 / No

16 C O V E R S T O R Y PEOPLE FIRST: MBA STUDENTS REFLECT ON AFRICA I had to get used to the fact that in Africa doing business has more to do with people than with contracts or rules, which is different from Germany. Everyone is respectful and friendly. And they expect the same of us and of their business partners. This is part of what Nils Eigenbrod (MBA 16), a student from Germany, learned during the MBA Overseas Module in Africa. The module is increasingly popular among students. Held for the third time in January 2016, it has now taken a total of 52 students to spend two weeks at Strathmore Business School in Nairobi (Kenya). I didn t know anything about Africa and even less about Kenya and I wanted to experience firsthand the changes under way in that part of the world, explains Eigenbrod. The module trains students in running a business in Africa and adapting to the diversity of indigenous cultures. The first thing you learn is that in Africa people are more important than any strategic plan, says Professor Alejandro Lago, academic director of the module in Nairobi. During their stay, IESE students meet students from the Strathmore Business School Executive MBA program and have the opportunity to discover cultural similarities and differences. Our students are surprised to discover that their professional and personal aspirations are the same as those of their African colleagues. Entrepreneurs have the same ambitions and values, says Professor Lago. HELPING COMPANIES The students aren t the only people to benefit from the experience. During their stay, the MBA students take on the role of project managers and consultants at local SMEs, helping them develop short-term strategies. Usually, these are small businesses that do not have the resources to hire a large consulting firm. It s amazing to watch the ability of our students to adapt themselves to African culture and the African company. They acquire intercultural business knowledge while doing something positive for the local economy. Doing business in Africa with medium-sized businesses also contributes to the development of local society, explains Professor Lago. This activity is one of the training innovations introduced into the Overseas Module, during which students also participate in academic sessions, case discussions, company visits and talks by local business leaders. You have to experience the reality of Africa firsthand in order to really understand it, signals Eigenbrod, who recognizes that he returned home more conscious of the great potential that the continent offers. Today it s one of the most interesting regions of the world for doing business and I m sure it will remain so for years to come, he concludes. 14 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

17 The creation of new companies offers fresh perspectives on the African economy. Many of these new companies are considered informal, but there are also some that are quite structured. Their multiplier effect on the economy is crucial, because they generate jobs and relatively steady incomes. They drive the middle class and consumption, and as they grow, they need financing and more sophisticated teams, which opens the door to a transition towards a formal economy, explains Prof. Lago. A MAJOR CHALLENGE: INTEGRITY lanother complex obstacle to conducting business in Africa is what Professor Ariño describes as administrative quality. That is, everything related to bureaucracy, political stability, democracy and corruption. These are key economic, political and social factors for gaining investor confidence. Simply put, for many managers, administrative issues are decisive when it comes to facilitating or hindering business in Africa. What s more, businesses usually face two major administrative obstacles: the official rules and the unofficial ones, which vary tremendously from country to country, explains Prof. Ariño. Political instability is another challenge. Professor Lago emphasizes that it has decreased sharply in the last 25 years, although he recognizes that there is still a long way to go. African democracies have matured, which has resulted in improved governance, more solid frameworks and increased investor confidence, he says. Still, problems persist. Poverty, although it has declined, continues to affect a significant percentage of the population. There are weaknesses in the education and health systems and poor infrastructure and public services, like electricity, water and transportation. In addition, elite exploitation of national wealth, power plays, legal uncertainty, bureaucracy, regulatory barriers and corruption are ongoing problems. Dean Njenga argues that Africa s main challenge is achieving a good degree of political and legal stability. He adds, Ending the embezzlement of public funds and establishing reliable legal proceedings to ensure that the perpetrators are penalized remains very difficult for most African governments. As for the causes of such impunity, he explains, The main reason is that most political officers are elected through a democratic process that is very costly. Once people get into office, they have to repay their economic benefactors. Njenga considers overcoming this challenge to be difficult but achievable. He concludes, Africa needs support from foreign companies, both private and public ones. If these companies stop making payments to handle political interference, the high cost of corruption will probably become evident. Macharia Chibesa believes that Africa is at a historic moment that requires patience. Our countries are all relatively new, and we are transitioning from outdated, traditional models to modern, stable democracies. This maturation process takes time. People who come from outside expecting everything to work the way it does in their countries are simply mistaken. It can t be that way; that kind of development in and of itself is one of the continent s biggest challenges. Obviously, the main recommendation in these cases is that managers always act in accordance with solid ethical values. In many cases, corruption is an attractive shortcut for overcoming challenges, but integrity is the best recipe for strengthening business in the long term. The complexity of this kind of situation is reflected in the case Voltium, Inc., by professors José R. Pin, Guido Stein and Juan C. Vázquez-Dodero. The case, which won an award from the European Foundation for Management Development (EFMD), analyzes the extortion experienced by an EMBA alumnus. The authors show the influence of circumstantial and cultural factors on business decision-making in Africa. EDUCATION: THE ENGINE OF DEVELOPMENT lin any community, education is the key instrument for fostering social harmony and the development of human potential. That is why, in a society as diverse and rapidly changing as Africa, high-quality education at all levels is crucial; it is the gear that turns the other wheels. There are several ways to improve productivity and wealth creation from business institutions, Njenga points out. In my opinion, the most important is building business institutional capability. Directing executive education toward SMEs is one of the most powerful contributions we can make to promote sustainable economic development in Africa, he says. The Strathmore Business School dean gives a clear example: it is estimated that 75 percent of Kenya s SMEs form a huge part of Kenya private sector business landscape. In Ghana the figure is 70 percent. Currently these companies pay very high fees for loans. Why? Simply because they don t have the habit of record keeping, and they don t inspire confidence in financial institutions. Executive education is the best tool to combat these problems. If more entrepreneurs received management education, there would be a great reduction in the incidence of unemployment and poverty in Africa, he explains. IESE s dean Canals agrees, We think that the best investment that can be made today in Africa is education: the history of African social and economic development isn t a matter of money. Africa isn t a poor continent, but it needs better management, says Prof. Canals. Okonedo, dean of Lagos Business School, indicates that opportunities in sectors such as technology, health care, banking, consumer goods and infrastructure give rise to the need for skilled labor and managerial competence. We need to move from education received in specific subjects to executive education, which hones skills in decision-making, management and leadership, she explains. Additionally, education in business schools inspires entrepreneurship and results in the creation of start-ups. After leaders receive management training, Alumni Magazine IESE APRIL-JUNE 2016 / No

18 C O V E R S T O R Y Temidayo Ojo (MBA 16), co-president of IESE s MBA Africa Club. 2. James Wanjagi (IFP 15), Strathmore Business School Professor and MoDe CIO participates in the International Faculty Program. 3. The Africa Think Tank & Networking Event, held November 19, 2015, on IESE s Barcelona campus, brought together a panel of experts to discuss business opportunities on the continent. new businesses are more likely to survive and thrive. And we know that this factor is particularly important in emerging markets, says Okonedo. Business leaders also point to the transformational power of education. According to Omondi, If across the continent we could offer this kind of top-notch education, centered on knowledge and values, we could completely redefine the current African business scene. We would have leaders with a much broader view of the world and of their task as managers. N Guessan shares her perspective from Côte d Ivoire, where political instability since 2002 has created a need for well-trained leaders that can successfully participate in the decision-making process. Thanks to my position at the MDE Business School, I have the opportunity to help our executives meet their personal and professional challenges, compete in a globalized world and prepare sub-saharan companies to face the arrival of new investors, she explains. COMMITTED TO CHANGE lfor more than 25 years, IESE has been both a firsthand observer of, and an actor with a decisive impact on, the development of management education in Africa. The first big step in our relationship with Africa goes back to 1992, when the Lagos Business School was founded in Nigeria with support from IESE, recalls Professor Javier Santomá. Professor Pablo Fernández and I had set the project in motion the previous year, at the request of then dean Carlos Cavallé. Our role was to advise the entrepreneurs in Lagos, serve as a model, give them the technology they needed to start and, above all, encourage them to invest in well-trained professors and follow their own path. They have done this brilliantly, says Prof. Santomá. Okonedo recalls the help that IESE offered, after a visit of the former bishop prelate of Opus Dei and Chan- cellor of the University of Navarra, Álvaro del Portillo. Don Álvaro visited Nigeria in 1989 and encouraged institutions such as IESE to come up with initiatives that can help with the development of leaders in the country. In 2005, IESE also contributed to the launch of Strathmore Business School in Kenya, part of the prestigious Strathmore University in Nairobi. And in 2009, it participated in the founding of MDE Business School in Côte d Ivoire. AESE, IESE s associate school in Portugal, helped drive the foundation of the Angola School of Management in CEIBS, IESE s associate school in China, also has facilities in Ghana. The relationship with these schools is being fostered year-by-year through the Pan African AMP and EMBA modules, and other programs, in which participants from the associated schools come to IESE s Barcelona and Madrid campuses for a week. For example, the last offering of the Pan-African EMBA brought together 100 African managers in Barcelona in October 2015 to learn more about intercultural team management, corporate governance, globalization and strategy. One of them, Kiche Otunga, Infrastructure Team Lead for the United Nations in Nairobi and a student in the Pan-African EMBA at Strathmore, highlights the global perspective that the program gave him. You learn how cultural differences affect the way that business is conducted around the world. IESE also promotes change in Africa through the development of faculty from African business schools. The International Faculty Program, a three-week program that the school has offered for 25 years, develops professors from emerging nations to improve their performance at their home institutions. It s a program centered on rigor and relevance, and it helped me communicate the essence of the cases that I discussed in my classes, says James Wanjagi (IFP 16 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

19 Participants in the AMP program of the MDE Business School (Côte d Ivoire) attend a meeting with managers during the module at IESE s Barcelona campus. 5. Professor Javier Santomá in a session of the International Faculty Program, which aims to improve the teaching skills of faculty at business schools in emerging countries. 15), professor at Strathmore Business School and CIO of MoDe. BRINGING THE REALITY OF AFRICA TO BUSINESS LEADERS lthe school not only helps develop African managers and professors; it also brings the reality of Africa to its students from around the world. A stand-out is the MBA Overseas Modules, whose content and impact are detailed in this feature (page 14). Program students also learn about the continent through events organized by the MBA Africa Club. As club co-president Temidayo Ojo (MBA 16) explains, the objective is on the one hand, to raise awareness about the current situation in Africa, and, on the other hand, to encourage the expansion of IESE on the continent in order to attract more students who can bring talent to the school and benefit from a world-class international education. In addition, IESE wants to build bridges among the various business communities. For that reason, the Barcelona campus periodically hosts the Africa Think Tank & Networking Event, a meeting point for African and European business leaders. These leaders also had the opportunity to meet at the Europe-Africa Business Summit that took place in Warsaw in NEW PATHS FOR DEVELOPMENT lis it possible to mitigate energy poverty in Africa? How can international investment in Africa be encouraged? These are two of the questions that IESE hopes to address through research. The Fuel Freedom Foundation Chair on Energy and Social Development, founded in late 2015, aims to answer the first of these. According to Chair Holder Professor Ahmad Rahnema, the initiative will boost the school s research on energy, with a present focus on the problems of developing countries. In another line of work, the ongoing studies by professors Lago and Ariño cited in this article are part of the research project How to do business in sub-saharan Africa: EXPAT and LOCAL perspectives. The objective is to develop an updated guide for western companies that hope to enter the sub-saharan market. This project, which has the support of IESE s associated schools, is one of those conducted by the Africa Initiative, the entity that oversees the school s activities on the continent. With the participation of professors Africa Ariño, Alejandro Lago, Lluís G. Renart, Alberto Ribera and Javier Santomá, along with research assistant Giovanni M. Mazzacani, it pursues the development of executive leadership that will have a positive long-lasting impact on African society. The ultimate goal is to help Africa s awakening become a bright future for its people. MORE INFORMATION: h IESE Africa Initiative: h Five Pillars for Doing Business in Africa. Mudida, Robert; Lago, Alejandro. IESE Insight Review. Number 24. March h Strategies That Go the Distance in Africa. Ariño, Africa. IESE Insight Review. Number 24. March h Vodafone Ghana Case. Nueno, Pedro; Akua Afful-Kwaw, Patricia. IESE Publishing. h Voltium, Inc. Case. Del Potro, Eloy; Stein, Guido; Pin, José Ramon; Vázquez Dodero, Juan Carlos. IESE Publishing. h Video: Africa: A Road Map to Opportunities on IESE s YouTube channel, with Profs. Africa Ariño and Alejandro Lago. Alumni Magazine IESE APRIL-JUNE 2016 / No

20 I D E A S ETHICAL CONFLICTS ACROSS CULTURES IS MY CULTURE SUPERIOR? CARLOS SANCHEZ-RUNDE Professor and director of the department of managing people in organizations, IESE When we visit another country, we may find ourselves in an apparent clash of values. It s no easy matter to interpret the actions of people from another culture. To do so, we have to overcome self-complacency, lack of perspective and communication problems. Ultimately, we should focus on underlying values rather than on the way they are enacted. BUSINESS ETHICS ETHICAL CONFLICTS CULTURAL DIVERSITY UNIVERSAL VALUES In the 1980s, in order to file a lawsuit in Spain, a plaintiff had to make an under-the-table payment to cover costs. These costs were set at a standard, modest amount, and paying them ensured that the suit would be processed according to established procedure. The practice was illegal and coercive: a file that was not paid for was not processed. The system of costs didn t affect the legal outcome of cases, however. From a practical point of view, it functioned like a fee, and it in fact amended some of the inequalities in the remuneration of court officials, but it had not been established legally. Lawyers and court officials understood that this situation was not ideal, but they didn t see it as a major problem. From outside Spain, things looked different. I remember the indignation of a French lawyer encountering the practice for the first time. To him it was an unacceptable manifestation of corruption in the judicial system. Seen from within, it wasn t a big deal. We are used to the fact that things look different from inside and outside a given system. The practice of costs wasn t all that strange in the Spain of the time, but it would have been unthinkable in France. As it happens, since this practice is now over, both systems have tended to converge into what clearly is a more positive state of affairs. BIAS IN THE EVALUATION OF CONFLICTS lfor individuals and businesses, national borders are among the most difficult frontiers to traverse. We face the question of how to distinguish behaviors that are simply different (and maybe even attractive and interesting in their exoticism) and those that seem illegitimate and immoral (and particularly irritating). This problem is made worse by the fact that we find it difficult to shake off the idea that our own way is right and the other s way is wrong. Let us take the mundane example of Mom s omelet. Without harboring any malice toward other mothers, we often believe that our own mother s omelet is the best, because once we re inside a system it s hard to get the necessary perspective to analyze that system objectively. Our mothers have taught us, omelet after omelet, what an omelet is. And her omelets would have to be really bad before we would concede that someone else s mother s omelet is the authentic omelet, the yardstick for the evaluation of all omelets. Our standards for what we consider to be a good omelet are often biased and can be difficult to modify. The issue 18 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

21 Alumni Magazine IESE APRIL-JUNE 2016 / No

22 I D E A S WE FIND IT DIFFICULT TO SHAKE OFF THE IDEA THAT OUR OWN WAY IS RIGHT AND THE OTHER S WAY IS WRONG becomes even more complicated when a restaurant menu uses the word omelet to refer to something that more closely resembles what we would call scrambled eggs. The omelet analogy represents the three specific problems of cultural plurality that we encounter every time we have to evaluate issues of ethical behavior in different cultures (in contrast, problems of ethical and prudential judgment are mostly independent of the cultural surroundings). First, we tend to think that, like Mom s omelet, our culture is superior to the rest. Second, we find it difficult to assess the traits of a culture from within that same culture (My mom s omelet is the gold standard of omelets). Finally, we face communicative and linguistic challenges in cross-cultural relationships (Is it an omelet or scrambled eggs?). Many Western executives, for example, complain that Chinese companies are less reliable than Western ones in meeting product delivery deadlines. From the outset we can see that this kind of claim is so generic that it is unlikely to be tenable. But when we examine Chinese norms of communication more closely, we see a strong tendency to try to reduce the potential for conflict. Imagine the following question: Can you deliver the finished product this month? Faced with insurmountable obstacles to meeting the deadline, a Westerner might say, No, that s impossible. However, a Chinese counterpart facing the same circumstances may say, It will be difficult, but we will try with all our might and I think we will succeed. Obviously, if we take these statements literally (which is what people in the West tend to do), we might conclude that the provider is lying in saying, It will be difficult but I think we will succeed, rather than the more realistic, No, that s impossible. And that would be an accurate conclusion from the inside, if the conversation were taking place among Westerners. But from the outside, managing codes of communication is more complex. The proof 20 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

23 is that if that conversation were to take place between two Chinese people, there would be no confusion. The person asking the question would understand that the product would not be ready by the end of the month. And let s not fall into the trap of thinking that one mode of communication is simply better than the other; they are both equally good once we understand how they should be used. In the end, it is reckless to deal with people of another culture without first understanding what differences in communication may separate us. COMMON VALUES, DIFFERENT EXPRESSION lclearly, communication difficulties can give rise to misunderstandings that lead us to wrongly question the ethics of people from other cultures. We must take a step beyond this point to ask a more basic question: Despite cultural differences, can we rely on universal principles or values that have transcultural validity? First, we need to clarify what is at stake when we talk about cultural conflicts. It is very common to hear that such conflicts arise from a clash between two different sets of values. This approach is a dead-end. If the issue is opposing values, negotiation and compromise become impossible, because values are the foundation of any hypothetical agreement. In reality, however, behind many of these conflicts are not incompatible values, but rather different manifestations of a shared value. For example, funeral rites have caused clashes and conflicts between peoples who find each other s practices surrounding the dead and their final journey to be insulting. Nonetheless, numerous anthropological studies reveal a difference between practices and underlying values. Conflicts between different mortuary practices (burial versus cremation, for example) obfuscate shared values, such as respect for the dead and filial piety. We must also remember that values are not merely discovered and defined in their complete and perfect state, but rather their conceptualization happens over time. Consider, for example, the shared value of the dignity of the human being. Throughout history, we see how the definition of this value has evolved. This process resulted in the fight against slavery, for example. This is a considerable step forward, and today we see that all cultures have progressed in this regard. Another realization of the value of human dignity is in the fight for equality among individuals and, in particular, between men and women. Different cultures today are at different stages in the realization of this value, and despite advances, no one is so naive as to conclude that equality has been fully achieved. In short, we share universal values, but they develop at different paces over time and space, with advances and occasional setbacks. The ultimate sign of progress is the fact that, despite difficulties, we are witnessing clear progress in the definition and understanding of universal values. A very simple test of progress would be to ask people of a certain era if they would prefer to live with the values and practices of a previous era, or if, on the contrary, they would prefer those of a future time. The answer is that, despite the pull of nostalgia, we tend to project ourselves into the future, not into the past. This does not change the fact that in different times and places some practices and not others become the expression of this progress. Ultimately, as long as underlying values are protected, the key is the extent to which proper respect is shown to different historical and cultural manifestations. It makes no sense to necessarily turn these differences into a cause for conflict and confrontation. On the contrary, once we accept that values can be expressed differently we can reach a deeper understanding of the nature and extent of cross-cultural conflicts. ONCE WE ACCEPT THAT VALUES CAN BE EXPRESSED DIFFERENTLY, WE CAN REACH A DEEPER UN- DERSTANDING OF THE NATURE AND EXTENT OF CROSS- CULTURAL CONFLICTS MORE INFORMATION: Sanchez-Runde, Nardon and Steers, The Cultural Roots of Ethical Conflicts in Global Business, Journal of Business Ethics, 2013, 116, pp Steers, Nardon and Sanchez-Runde, Management Across Cultures, 2013, Cambridge University Press. Alumni Magazine IESE APRIL-JUNE 2016 / No

24 I D E A S ADDITIVE MANUFACTURING RECONFIGURES INDUSTRIAL OPERATIONS 3D PRINTING: THE DIGITALIZATION OF MANUFACTURING MARC SACHON Professor in the department of production, technology and operations management, IESE With 3D printing, the digital economy will make the move from the world of data to the physical world. This technology has the potential to transform manufacturing processes, reconfigure global supply chains and give rise to business models that are hard to imagine today. 3D PRINTING ADDITIVE MANUFACTURING FOURTH INDUSTRIAL REVOLUTION PRINTER FARMS SUPPLY CHAIN INDUSTRIAL OPERATIONS PRODUCTION STRATEGIES Last November an Airbus took off from the company s headquarters in Toulouse containing the largest 3D-printed part ever to fly as a component of an aircraft. It was the front bearing housing of Rolls- Royce s most powerful motor, the Trent XWB-97. This titanium part, with 48 airfoils, measures 1.5 meters in diameter by 0.5 meters thick. The flight was a test of the new widebody Airbus A , which will hit runways in Thanks to 3D printing, Rolls-Royce reduced production time by 30 percent, while at the same time optimizing the design, functionality, cost and speed of the craft. Major manufacturers in the aerospace sector have been using 3D printing for several years. Airbus, along with Boeing, GE and Rolls- Royce realized quickly that 3D printing meant cost reductions of 25 to 50 percent and a faster delivery date. Another important advantage in industries such as aerospace or the navy is that parts manufactured with 3D printers can weigh between 10 percent and 30 percent less than those produced by conventional methods. In addition to bringing down costs, weight reduction also lowers fuel consumption and emissions while simultaneously improving power, acceleration and speed. The automotive industry is also using this technology, currently mostly in Formula One and luxury cars. EOS, located in the Munich area, is one of the most emblematic companies in additive manufacturing. The company is a global leader in metal 3D printing, with customers in the aerospace, automotive and health industries. Its technology is used not only by Airbus, BMW, Boeing and GE, but also in the field of dental implants: more than a million have been produced in Europe. It seems that, for now, innovations in 3D printing don t necessarily come from the US, but rather from the old world, especially in industrial 3D printing. ADDITIVE MANUFACTURING VS. TRADITIONAL MANUFACTURING l3d printing encompasses the use of different technologies 22 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

25 (writing, fusion, injection, extrusion, stereolithography and sintering) and of different materials (plastics, resins, glass, ceramics, metals and their alloys), yet they share a trait: in all these technologies, a part is built by depositing layers of a material, rather than molding it or shaping it using lathes and milling machines. These traditional forms of production are known as subtractive manufacturing. In contrast, industrial 3D printing is referred to as additive (or layer-by-layer) manufacturing. This paradigm shift in production has numerous advantages: Simpler production processes. The stages of production are significantly reduced. All you need is a printer, and the product emerges almost finished. Sometimes there is a post-production phase for polishing, cleaning, or laser, but in general it s not necessary to have the machinery and personnel required by a manufacturing and assembly chain in a traditional production process. No molds. Since no molds are required, the same printer can manufacture different models of the same product or even different products made out of the same material (for example, a car part or a faucet part), at the same time or during the same production phase. Customization. Additive manufacturing makes it possible to create exclusive designs, adapted to the needs of each customer. You only have to adapt or adjust the digital file containing the three-dimensional blueprint in order to modify the product that comes out of the printer. Cost reductions. With less waste and lower expenditure on machinery and personnel, it becomes possible to produce small batches at a lower cost than in a traditional system. In addition, it s possible to add greater complexity without increasing costs and to reduce the number of parts necessary for a given product. With fewer parts to assemble, machinery and personnel costs also drop. In general, operating costs and required capital investments are reduced. Currently, in terms of production costs, 3D printing is competitive when it comes to very complex parts with a high degree of customization and a reduced production volume. Long tail business. The arrival of the Internet has allowed companies to offer a much wider array of products than what the customer sees at a bricks-and-mortar store (for example, bookstores vs. online booksellers). This business model is based on the concept of the long tail, characterized by an abundance of products within a single category. 3D printing will intensify this effect: it makes it possible to maintain dig- Alumni Magazine IESE APRIL-JUNE 2016 / No

26 I D E A S 3D PRINTING MAY HAVE EVEN MORE DISRUPTIVE POWER THAN BIG DATA OR THE INTERNET ital stocks of products rather than physical stock, thereby significantly reducing the working capital while moving the virtual stock closer to the end customer (Amazon and DHL are looking into operating 3D printers in their distribution centers). One example is the automotive industry: in Europe, manufacturers are required by law to ensure that after the last production batch of a given car model, replacement parts will be available for at least ten years. This forces the industry to keep a significant amount of working capital frozen in warehouses throughout Europe (or to absorb significant costs in order to launch an unplanned production batch). With 3D printing, all of these replacement parts become virtual stock, printable on demand. Product optimization. 3D printing allows designs that are both more complex and more efficient, designs that are often impossible to carry out using traditional methods. They can even imitate nature, for example, reproducing the shape of a leaf or the structure of a honeycomb. In addition, it is possible to alter the properties of the product via the use of lasers and the injection of other materials with different densities. Ultimately, the resulting product has a wider range of features and is stronger, lighter and more flexible. Active quality control. Quality control can be much more exhaustive and can go so far as to monitor the product layer by layer. It becomes literally possible to look inside a part without X-rays. More efficient supply chains. 3D printing can bring production to the sales market, because it s no longer necessary to locate labor-intensive work in low-cost countries. Also, companies can produce on demand with zero stock, because designs are stored in digital archives that are only printed when needed. They can even decide to manufacture on site with a design developed thousands of kilometers away and sent electronically. Shipping company Maersk Line is already using these approaches. It has equipped its cargo ships with 3D printers in order to print on board any replacement part that it might need during a trip. These supply-chain improvements not only generate major savings in logistics and transport, but are bringing about a global restructuring of manufacturing value chains in the medium and long term. Flexibility and lower entry barriers. 3D manufacturing does not require major technical infrastructure, which significantly reduces the time and costs for production start-up. With lower initial capital requirements, the door is open to new competitors small and midsized companies that specialize in small volumes and niche markets, for example and the emergence of new business models. FROM PROTOTYPING TO MASS PRODUCTION llittle by little, 3D printing is overcoming some of the technological challenges that keep it out of mass production. For one thing, the size of manufactured parts is still limited by the size of the machines and the capacity of their printing chambers. It s also important to keep in mind the current price of the printers (which ranges from 150,000 to 1.5 million) and the cost of the materials (which are between four and 100 times more expensive than those used in traditional manufacturing). A Production time is also an important factor. All 3D printing techniques subject materials to very high temperatures. Under these conditions, both printing and cooling require a complex, sensitive process that takes time. Alumni Magazine IESE

27 Over the short and medium term, traditional manufacturing isn t going to disappear, especially not in mass production. We re still a long way from seeing a generalized, massive use of this revolutionary technology. But the 3D production of parts and components is a reality in advanced, high value-add industries: hip prostheses and dental implants in the medical industry, airplane parts in the aerospace industry, components and replacement parts for the automotive industry. For now, 3D printing is used in relatively short series and small batches of expensive, sophisticated parts in the most cutting-edge industries. But the number of products manufactured in 3D is growing exponentially. And so are projections of global sales of 3D printers. According to the latest estimates by the consulting firm Gartner, this year they could already exceed 490,000 units (more than four times the 106,000 units sold in 2014). Gartner estimates that in the next three years, sales will skyrocket to reach 5.6 million units in BUSINESS CHALLENGES ltwenty or thirty years from now, industrial 3D printing may have even more disruptive power than Big Data or the Internet. In fact, along with artificial intelligence, robotics, the Internet of Things and nanotechnology, 3D printing is one of the focuses of what s being called the Fourth Industrial Revolution. This transformation is characterized by the fusion of technologies that blur the lines between the physical, digital and biological. 3D printing has the potential to drastically reconfigure manufacturing ecosystems the world over. And that will pose major challenges for businesses: New manufacturing strategies. Additive manufacturing creates a range of choices about how, when and where to manufacture products and their components; which assets to keep in the supply chain and which to outsource; and how to optimize the mix of old and new processes for each part at any given moment. That is, industrial 3D printing will force companies to reconsider their manufacturing strategies and to rethink where they produce, what they outsource and what they produce in-house. Organizational challenges. In terms of general management, the biggest challenge will be to align company strategy with new industrial operations and to align research and development with the change in production systems. It will also be crucial to develop new capabilities: engineers need to be reeducated to think not in terms of design for manufacturability, but rather design for the maximum performance of each component. In addition, companies will have to create transition plans in order to get the workforce accustomed to the new production methods and professional retraining plans to relocate employees affected by the changes. Changing cost structures. In general terms, fixed capital investments and direct costs (such as labor) will drop, but at the same time, general expenses, such as those related to product design or the purchase and maintenance of printers, will rise. Protecting intellectual property. Developing piracy protection for STL/AMF files, the industry standard for 3D printing, will be paramount. New business models. In addition to the emergence of printer farms, 3D printing will inspire a range of other new business models. Some of them we can t even imagine, just as in 1990 it would have been difficult to imagine Amazon or Uber, but others the long tail model, whose profitability lies in amassing sales from a long list of low-demand products are already beginning to emerge. PRINTER FARMS One standout among the new business models to emerge with industrial 3D printing is the printer farm, an analog to the already-existing server farm. The printer farm will make it possible for customers to print in 3D without incurring the expense of purchasing a printer. The idea is to apply the logic of pooling, which concentrates demand on a set of centralized resources, to the world of industrial 3D printing. In addition, printer farms make it possible to relocate production near to the areas of demand and allow companies to outsource manufacturing in order to focus on activities with higher added value, such as design, R&D or marketing and sales. Alumni Magazine IESE APRIL-JUNE 2016 / No

28 I D E A S HIGHLIGHTS Managing Mergers in the Automotive Industry ROSA CAIAZZA, PEDRO NUENO AND GRAZIELLA FERRARA There are two keys to a successful merger: 1) respecting diversity and 2) developing an integration plan that accounts for both before and after scenarios. These strategies are essential to overcoming cultural differences between the merging companies. This is the conclusion of an exploratory study of international mergers in the automotive industry, taking the cases of Daimler-Chrysler, Geely- Volvo and General Motors-Fiat as examples. MORE INFORMATION: IESE Insight / Strategy WHAT MAKES FAMILY BUSINESSES STRONG? JOSEP TÀPIES AND NÚRIA VILANOVA leighty-eight percent of family businesses say that the fact that they are family-owned has a positive impact on their public image. But where does these companies strength lie? In most cases, the values that inspired their businesses are still a key part of the organization, even as they face new challenges like growth, generational differences, and the geographic spread of the family. So concludes the report Values and Communication in the Family Business, carried out by the Chair of Family-Owned Business, held by Professor Josep Tàpies, and Atrevia, presided over by Núria Vilanova. The report analyzes how values are experienced and passed on in familyowned businesses. MORE INFORMATION: IESE Insight / Strategy CASE Olapic, or How to Transform Your Business Model JUAN ROURE AND JUAN LUIS SEGURADO Olapic began as a platform for exchanging wedding photos. Then it evolved into a service that allowed newspapers to take advantage of photos taken by their readers. Next, in pursuit of growth, it became a service to help brands promote their products online using photos taken by customers. Is this the best path forward? Professor Juan Roure and lecturer Juan L. Segurado study the metamorphosis of the start-up s business model in the case Olapic: Migrating the Business Model, which overviews the company s first three years. MORE INFORMATION: 26 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

29 OPEN INNOVATION ISN T ALWAYS PROFITABLE BRUNO CASSIMAN AND GIOVANNI VALENTINI lscientists, investors and R&D departments take great pains to develop innovations that they can patent. However, according to a study of more than 9,000 European patents, a third of them end up in a drawer, never to be used. This could be a symptom of inefficiencies in the innovation process. In the article Open Innovation: Are Inbound and Outbound Knowledge Flows Really Complementary? professors Bruno Cassiman and Giovanni Valentini analyze why The Prudent Entrepreneur BRIAN T. MCCANN AND GOVERT VROOM MORE INFORMATION: IESE Insight / Strategy buying and selling knowledge still does not yield returns. The authors question the studies about open innovation that suggest that both the knowledge producer and the knowledge acquirer always benefit. They conclude that this is not always the case and they call for more in-depth studies on the question of who benefits from open innovation, a complex issue that is not always understood well. MORE INFORMATION: IESE Insight / Knowledge and Communication A start-up s planning phase is useful not just for convincing banks and investors of the project s viability. It is also decisive in allowing entrepreneurs to gain confidence and gauge their chances of success. After analyzing the results of a survey of American entrepreneurs, the authors of this study conclude that those who adopt a proactive stance during the planning phase manage to reduce uncertainty and tend to succeed in carrying out their plans. IESE Insight Managing Risks Effectively In an age when the risks facing companies are becoming ever more complex and imminent, IESE Insight dedicates Issue 28 to the growing importance of risk management. Philip Bromiley and Devaki Rau offer nine practical suggestions to help senior managers distinguish the risks that really matter those that might put you out of business. Professor Gaizka Ormazabal describes the pressure on boards to oversee corporate risk and how companies are responding. Witold J. Henisz explains how to mitigate stakeholder risks and maximize stakeholder potential. Dean Jordi Canals presents a framework to make companies respected institutions in society once again. Alejandro Ruelas-Gossi suggests how countries can escape the low-cost trap and enhance their natural Vantage Point. Professor José L. Nueno interviews Alex Cruz about his success at Vueling and the new challenges he faces as the next CEO of British Airways. DEEP INSIGHT TO SUBSCRIBE TO THE MAGAZINE: FIRST QUARTER 2016 ISSUE 28 ieseinsight.com/review PRICE PER EDITION 18 Managing Effectively Risks A BETTER WAY OF MANAGING MAJOR RISKS RISK OVERSIGHT: WHAT EVERY DIRECTOR SHOULD KNOW 12 PITFALLS TO AVOID IN MANAGING REPUTATIONAL RISKS INSIDE A MORE HOLISTIC VIEW OF THE FIRM Transforming companies into respected institutions Escape the low-cost trap and enhance value for your business Adapting to the ever-changing world Debating the sharing economy CRAFTING YOUR VANTAGE POINT ALEX CRUZ, CEO OF BRITISH AIRWAYS AIRBNB: WHAT S NEXT? RELEVANT BUSINESS KNOWLEDGE Alumni Magazine IESE APRIL-JUNE 2016 / No

30 C R O S OS R OI A D S DOING GOOD DOING WELL CONFERENCE INNOVATION FOR SUSTAINABILITY Student-run conference on corporate social responsibility introduces disruptive business models. We set out to build a sports car; use that money to build an affordable car; use that money to build an even more affordable car. And while doing the above, we would provide zero-emission electric power generation options, explained Jelle Vastert (MBA 09), head of EV Infrastructure Europe at Tesla and a speaker at the Doing Good Doing Well conference (DGDW), organized by IESE MBA students February 26 and 27. The DGDW underscores the school s commitment to ethics and the development of human values in the business world, and has become the most important student-run conference on corporate responsibility in Europe. Now we all take for granted that Social Corporate Responsibility working towards a better world is a crucial task of tomorrow s managers. Tesla is already moving in this direction, explained Vastert. Of course it s very important to strategize right at the outset. But it s key to have a clear sense of purpose. We have created a real alternative to the combustion engine. And we are changing perceptions about electric mobility. For us, sustainability is just as decisive as the value proposition we deliver, Vastert said to the more than 600 people who attended the event at IESE s Barcelona campus. The company s strategy is already paying off, he explained. Tesla is experiencing exponential growth across Europe. In July of 2015 we saw more than 20 million kilometers driven by owners of Teslas, he said. THE ROLE OF NON-PROFITS lthe DGDW also featured managers from charities and social enterprises, who highlighted the outcomes of their collaborations with companies. Sally Burnheim, chief of Advocacy and Innovative Partnerships, Private Sector Engagement at UNICEF Geneva; Truus Huisman, VP of Sustainable Business and Communications at Unilever; and Jan Levy (MBA 01), managing director at Three Hands, which helps companies work with local communities, agreed that big companies could increase their efficiency by creating alliances with non-profits. Unicef is working at the forefront of understanding what people really need, said Burnheim. Of course, building products and services that people really need yields business opportunities, she added. From the private sector, Huisman agreed that working with NGOs makes her work easier. At Unilever we are leveraging our work with non-profits to identify new opportunities and to drive new models of sustainability. Partnerships are helping us to take new ideas to scale and drive innovation for impact, she noted. Sustainable brands are currently accounting for 50 percent of Unilever s growth. Jan Levy challenged the concept of giving back as the exclusive province of the third sector and called for a fully equitable relationship between business and the community. Companies already innovate by drawing on information they receive from non-profits, but the equation should be widened. We believe it s the role of business to do right by its entire community of stakeholders from shareholders, to employees, to customers to the community, concluded Levy. 28 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

31 More than 600 people attended the conference Doing Good Doing Well at IESE s Barcelona campus. 2. Jelle Vastert (MBA 09), head of EV Infrastructure Europe at Tesla. 3. From left to right: Dina Medland, contributor to Forbes Europe, Sally Burnheim, chief of Advocacy and Innovative Partnerships, Private Sector Engagement at UNICEF and Jan Levy (MBA 01), managing director at Three Hands. 3 OPEN SOURCING INNOVATION lmariona Vicens, head of Innovation at CaixaBank, reflected on fintech organizations, which use new technologies to offer innovative financial services. Increasingly, banks are working with fintechs to improve their services and reach underserved markets, said Vicens. But innovation doesn t come from these collaborations alone, she explained. Rather, it s based on greater transparency, a defining trait of the fintech model and a key to helping the banking sector overcome its reputation problems. Traditional banks have a lot to learn from the new models, Vicens pointed out. Other noted speakers at the conference were Marcello Palazzi, founder of B Corp Europe; Michel Genet, former head of Greenpeace Europe; Jacques Van Rijckevorsel, member of the Executive Committee at Solvay; Daphne Koller, founder of Coursera; George Koukis, former chairman of Temenos; Michele Giddens, co-founder at Bridges Ventures; Ariel Kestens (GEMBA 09), head of Learning, Education and Research at the International Federation of Red Cross; and Randall Krantz (MBA 02), founder of Constellate Global. SUSTAINABILITY IS JUST AS DECISIVE AS THE VALUE PROPOSITION WE DELIVER Jelle Vastert (MBA 09), head of EV Infrastructure Europe at Tesla Alumni Magazine IESE APRIL-JUNE 2016 / No

32 C R O S OS R OI A D S U.S. ADVISORY COUNCIL ANNUAL MEETING DECODING DISRUPTION: DIGITAL, ECONOMIC AND POLITICAL IESE s U.S. Advisory Council explored different factors driving change in U.S. politics, economics and business during two discussion sessions with MBA students. Although U.S. stock markets have had a negative start to the year, Edward T. Reilly, president and CEO of the American Management Association, encouraged IESE MBA students to look at the bigger picture. I urge you in your business career to decouple what s happening in the stock market from what s happening in real economy, he said. Despite what you may have read about fragility, the U.S. economy is actually in pretty good condition, he concluded. Reilly was one of five U.S. Advisory Council members taking part in a discussion about the U. S. economy and the country s political landscape. Alongside him on the Barcelona campus on March 4 were Carlos Padula, managing partner of Stelac Advisory Services; John Schmitz, managing director at Prime Policy Group; John Sturm, associate vice president of federal and Washington relations at the University of Notre Dame (U.S.); and Professor Eric Weber, associate dean of IESE. 1. Prof. William F. Baker, Claire Huang, Allan Glazen and Kate O Sullivan. 2. Carlos Padula, Edward T. Reilly, John Schmitz, John Sturm and Prof. Eric Weber APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

33 Padula pointed out that one of the factors negatively affecting share prices was the massive liquidation of assets by about a dozen sovereign wealth funds. Last year those funds sold approximately an extra $300 billion in fixed income securities. We don t know how much they re going to sell this year. Regular inflow is about $1 billion per day. So consider how huge an extra $300 billion is. Because of this uncertainty, there is reduced demand, he said. The future of U.S. politics is equally uncertain as voters select their candidates for the forthcoming presidential elections. John Schmitz offered first-hand insight as a part of former Republican Party candidate Jeb Bush s campaign team. Despite most European economies being weaker than the U.S., with higher unemployment and greater immigration issues, European voters were considerably less angry than their U.S. counterparts, he said. Trump has tapped into that and his rise is rewriting the rules of American politics. John Sturm, former president and CEO of the Newspaper Association of America (NAA) said that as a registered lobbyist he dealt with the U.S. Congress on a daily basis. In his opinion, the disenchanted, disillusioned and disappointed voters who have seen their real incomes fall or plateau over recent decades have led to the rise of candidates from the fringes of the Republican and Democratic parties. THE DIGITAL FUTURE OF BANKING, BRANDING AND THE LAW lin another session, MBA students learned from Professor William F. Baker that there are an estimated 1.5 billion digital applications, with the average U.S. citizen using as many as 27 apps every day. This digitization of the world is set to transform industry beyond recognition. Discussing this digital disruption alongside Professor Baker were Claire Huang, board member at Scottrade and Foster Farms; Alan Glazen, CEO of Glazen Urban; and Kate O Sullivan, senior director of strategic relations in Microsoft s Legal and Corporate Affairs Department. Huang, who has held senior positions in banking, including CMO at JPMorgan Chase, said that we are seeing the traditional model of one-to-one advice based on risk tolerance and asset re-balancing being disrupted by technology. We re in a new era of robo-advising, which uses algorithms to assess your risk tolerance and rebalance your portfolio, she said. According to Glazen, In today s market, more than 80 percent of your customers are making purchasing decisions influenced by what they find online about you. In a hyper-informed market it s our products and services that brand us, not vice versa. The farmer used to brand the cow, now it s the cow branding the farmer. He encouraged companies to divert spending away from branding and toward research and development. In the opinion of O Sullivan, the big issue is our failure to anticipate that our lives would be lived in the cloud. The exponential growth of the cloud is presenting highly complicated legal issues touching on privacy and security, which industry and government now have to grapple with. The future of technology is in the cloud, and part of that is the right legal framework, she said. 1. John Schmitz 2. Mireia Rius 3. William F. Baker 4. John Sturm 5. Kate O Sullivan U.S. ADVISORY COUNCIL Since 2011, U.S. executive directors and CEOs have provided the school with advice for the long-term development of activities in the United States. The annual meeting of the U.S. Advisory Council was held on March 4 in the Barcelona campus. William F. BAKER Channel Thirteen Gerry BYRNE PMC (Penske Media Corporation) Jordi CANALS IESE Tom CASTRO El Dorado Capital Carmen DI RIENZO DiRienzo Consulting 6. Edward T. Reilly 7. Prof. Jordi Canals 8. Prof. Franz Heukamp 9. Claire Huang 10. Luis Casas Alan GLAZEN Glazen Urban Frank J. HAGER OppCAP Claire HUANG Scottrade Jay IRELAND GE Africa Tom KANE CBS 11. Alan Glazen 12. Teresa Gener 13. Prof. Eric Weber 14. Carlos Padula 1 2 Kate O SULLIVAN Microsoft Corporation Carlos PADULA Stelac Advisory Services Juan PUJADAS PwC Edward T. REILLY American Management Assn. Tom ROGERS TiVo John SCHMITZ Prime Policy Group John STURM University of Notre Dame Christopher VOLLMER Strategy& Eric WEBER IESE Kathryn WYLDE Partnership for New York City Alumni Magazine IESE APRIL-JUNE 2016 / No

34 C R O S OS R OI A D S José A. Álvarez, CEO of Banco Santander; José Sevilla, CEO of Bankia; Gonzalo Gortázar, CEO of CaixaBank; Juan J. Toribio, IESE Professor; and Luis M. Linde, governor of the Spanish Central Bank. BANKING INDUSTRY Finding New Pathways to Profitability lthe current landscape of the European financial system is increasingly demanding, competitive and subject to uncertainties. Margins are getting slimmer, with new competitors emerging and more complex regulation. These were some of the topics discussed at the 11th Banking Industry Meeting, held at IESE Madrid on December 10. Organized by IESE s Center for International Finance (CIF) in collaboration with EY, the event brought together nearly 200 professionals. The challenge of finding profitability and adaptation to the new regulatory framework are the two major challenges facing the industry, explained the event s academic director, Prof. Juan J. Toribio. The governor of Spain s Central Bank, Luis M. Linde, noted that we are still in a stage of banking consolidation to address the lack of profitability of financial institutions. Even though earnings have improved, Linde pointed out that current levels of profitability (around 5 percent) are still below the estimated cost of capital. In addition, the ECB s monetary policy affects the profitability of entities, which should pursue other avenues of business. We should be promoting financial services that aren t dependent on having low interest rates, said the CEO of CaixaBank, Gonzalo Gortázar. Life insurance, pension funds, consumer finance and the business of transactionality between companies were among the alternatives discussed. With regard to mortgages, Bankia CEO José Sevilla said that the differentials of these forms of credit should be linked to the country s public debt, not the Euribor, since the main competitor for attracting money in the markets is the national government. It is vital to diversify assets in different markets to ensure the growth of the business. Banco Sabadell CEO Jaime Guardiola acknowledged that there are good opportunities internationally. Given the key role of technology in the banking industry today, entities should develop catalogs and digital platforms for their customers. The digital realm gives us a means to transform ourselves and enhance the customer experience, said Jorge Sáenz de Azcúnaga, business director at BBVA. NEW REGULATION lwith reference to the new regulatory measures, Banco Popular CEO Francisco Gómez Martín (PDG 03) said that overregulation hinders the flow of credit. As discussed, there is an increasing amount of credit being extended via shadow banking, i.e. financial institutions that are not subject to banking regulation. The CEO of Banco Santander, José A. Álvarez, insisted that shadow banking will not survive when interest rates rise. Without becoming a bank, no business model can operate like that, he said. 32 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

35 C R O S OS R OI A D S PROFESSOR PEDRO NUENO REFLECTS ON THE ROLE OF BOARDS OF DIRECTORS The board should be a gas pedal, not a brake Proactive, responsible, well-informed and professional: Today s boards need members who fit that description to tackle the challenges posed by legislation, digitalization and globalization. lboards of directors have left the comfort zone. The changes that are transforming today s companies require increased professionalism and responsibility among board members, as well as greater knowledge and new skills. New trends demand that boards evolve and have more influence on a company s actions, explains Professor Pedro Nueno. In addition to taking on a bigger role in business strategy, boards also have to respond to companies changing needs. The pace of businesses has accelerated and the board should be a gas pedal, not a brake, adds Professor Nueno. In that regard, he points out that board members should encourage entrepreneurial spirit inside the company. The acceleration of activity has been brought about by digitalization, one of the major engines of change alongside globalization. If you have a good business idea, now it s valid all over the world, states Prof. Nueno. In addition, board members have to respond to changing regulatory demands. Laws have evolved such that the board is no longer an easy place to be; board members have serious responsibilities, he says. PROFESSIONALIZING THE BOARD lboard members need to be up to the challenge, with essential, first-hand knowledge. They have to know the industry and the company better; they may even need to visit the facilities. When something relevant to a given area is up for discussion, the manager for that area should be invited to speak to the board. That way, the board is properly briefed on all the relevant details, says Prof. Nueno. He also advises periodic renewal of board membership. In his opinion, board members should step down to make way for others after a maximum of ten years of service. Professor Nueno addresses these issues in his new book El Consejo 2020 and in Value Creation Through Effective Boards, a Focused Program that IESE offers jointly with Harvard Business School. Participants learn from faculty from both schools and share knowledge with other board members. It s a great opportunity to find out how other companies and individuals with the same level of responsibility are handling similar problems, he explains. MORE INFORMATION: Professor Pedro Nueno is one of the faculty members of Value Creation Through Effective Boards, a Focused Program that IESE offers jointly with Harvard Business School. Alumni Magazine IESE APRIL-JUNE 2016 / No

36 C R O S OS R OI A D S IESE BUSINESS ANGELS AND FAMILY OFFICES NETWORK 100 Forums Supporting Entrepreneurs Investors and entrepreneurs at Forum Number 100. lthe connection between investors and entrepreneurs is vital for the success of a start-up. The business model is important. But even more important are the people: their values, how they act. That is crucial, said Antonio González- Barros (PADE 01). The founder and CEO of Grupo Intercom and investor in Niumba was one of the speakers who shared their insights at Forum Number 100 of the IESE Business Angels and Family Offices Network. Prof. Joan Roure, who founded the network in 2003, explained that 25 million have been directly invested in 120 projects by investors from the network. That figure is multiplied by 4 or 5 with the collaboration of other investors. Over these 13 years, the network has evaluated more than 3,000 projects and presented more than 800 in its forums. But not all of them secured financing or turned out to be successful. According to Luis Martín Cabiedes (MBA 85), Some projects make it, some don t. When the time comes, you have to know how to end the right way and pull the plug in time. It s all good. That doesn t constitute failure. It s often just random luck of the draw. With a long history in investment, Martín Cabiedes said that whether or not the business goes well, We have to realize we re going to run into some obstacles. Every enterprise has its ups and downs. The participants concurred that it is a winding road, which makes it vital to align the interests of investors and entrepreneurs. One example with a happy ending is Niumba, the website specializing in holiday rentals, which was acquired by TripAdvisor in We didn t make any money for five years. But if you have a clear vision of what you are doing, of adding value and doing things well, then the challenge becomes more bearable, said its founder, María J. González-Barros. The Forum also looked at the experience of Wallapop, a popular online marketplace. Created by en- trepreneur Gerard Olivé in Spain, it now has a presence in Europe and the U.S. But it had its share of tribulations early on, explained Javier Cebrián, one of the project s investors. It was not easy to define the business model, decide which people should be on the team or choose certain partners. We were lucky with our decisions and we were able to overcome obstacles pretty well, said Cebrián. The event took place simultaneously on the Barcelona and Madrid campuses on December 2. MORE INFORMATION: THE NETWORK BY THE NUMBERS 13 YEARS 100 in existence 120 PROJECTS funded INVESTMENT 800 forums held 25 MILLION invested PROJECTS presented +2,300 JOBS created 34 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

37 C R O S OS R OI A D S HOMAGE TO PROFESSOR RAFAEL TERMES ( ) IF THE BANKING SECTOR DOESN T SERVE SOCIETY, IT S NOT MORALLY JUSTIFIED Ten years after Professor Rafael Termes death, his words still resonate. His conviction was that the financial system should both generate wealth and serve society. l The economic recovery depends on the banking sector appearing solvent, explained Luis de Guindos, Spanish minister of economy and competitiveness at a tribute to Professor Rafael Termes. De Guindos pointed to massive loans by financial institutions, deficit accumulation and inadequate corporate governance as some of the main causes of the economic crisis. In light of what was to come, Prof. Termes pronouncement has proven accurate, even ten years after his death. What Rafael Termes said about the way boards of directors are run is particularly relevant. He spoke about the need for moderation and austerity in the compensation of upper management, said IESE s dean Jordi Canals. One of his maxims was that a bank is a financial company. If it doesn t create wealth for the people that participate in it, it s not economically justified. And if it doesn t serve society, it s not morally justified, recalled Prof. Juan J. Toribio. A great defender of the market economy, Prof. Termes also stood out as a humanist. Prof. Antonio Argandoña spoke of his defense of human dignity and freedom, which he understood as subject to truth and to the rights of others. Fortunately, the things that Termes taught us are still reflected in today s society and in life, said Prof. Argandoña. Prof. Toribio noted that Professor Termes ideas would have allowed him to anticipate the real estate and financial bubbles that caused the collapse of the world financial system eight years ago. His sense of reality and of risk, said Prof. Toribio, would have enabled him to identify the problem quickly. And his longterm vision wouldn t have allowed him to keep quiet about the threat that faced the banking sector. His conception of banking would have clashed with some sector practices, especially in the U. S. He would have disapproved of the practice developed by many banks of offering credit beyond a reasonable limit. Nothing could be further from his concept of banking than the strategy of creating and selling without a rigorous risk analysis. During his whole life, he did the opposite, explained Prof. Toribio. De Guindos also noted the ongoing validity of Prof. Termes ideas about the banking sector, such as the importance of transparency, values, prudence, austerity and the relationship with the real economy. THOUGHT AND ACTION lprof. Termes was the first president of the Spanish Banking Association and managing director of the Banco Popular Español from 1966 to He was honorary president of IESE in Madrid, where the tribute to him was held December 14. The strength of his thought lies in the fact that he wasn t an abstract theorist, but a thinker and a man of action. He was committed to society s problems, explained Prof. Argandoña. He always stood out for the consistency of his faith, thought and action. In turn, Dean Canals described him as the father of Spanish finance. Beginning in 1958, he introduced economic concepts used in the United States, adapting them to the European and Spanish context. He taught them at IESE, where he was a professor of Finance from the school s founding, Prof. Canals said. He also announced interest in founding a chair of banking and finance named after Termes. Alumni Magazine IESE APRIL-JUNE 2016 / No

38 C R O S OS R OI A D S IESE TEAM WINS IESE ROLAND BERGER CASE COMPETITION Case Method Puts Future Business Leaders to the Test IESE representatives: Matthew Martin, Vidya Sarma, Mridula Krishnan and Rebecca Bub. lmba students from the top management schools in Asia, Europe and the United States exchanged ideas and discussed the future of the automobile industry at the 21st edition of the IESE Roland Berger Case Competition. The representatives of IESE emerged victorious after competing for two and a half days against teams from CEIBS, HKUST, Kellogg School of Management, London Business School (which was a finalist) and Tuck School of Business. Under the title Gestamp: Becoming Indispensable to Major Automotive Manufacturers, the case being analyzed revolved around the strategic plans of the automotive components manufacturer Gestamp. Using the case method, each team presented their suggestions before a jury composed of the CEO of Gestamp, two partners from Roland Berger and Prof. Marc Sachon. The competition took place February on the Barcelona campus. This is the second time IESE has won the case competition, which began in 1995 and has become a benchmark for MBA students around the world. IESE PARTICIPATION AT MOBILE WORLD CONGRESS The future is happening today l We are living in a world where the connections between people, business and things are growing exponentially, said Prof. Javier Zamora during the talk he gave on February 24 at the Mobile World Congress in Barcelona. By 2020 we ll be looking at an estimate of 20 billion things connected to the Internet, Prof. Javier Zamora during his session at the Mobile World Congress. he said. Delivering his talk, titled The Internet of Things (IoT): Blurring the Frontier Between the Digital and Physical Worlds, Prof. Zamora said that business schools have a key role to play in making sense of the digital transformation for companies who may be blindsided by change. A change that will force many of them to rethink their business models. The future is happening today and it s happening fast, he said. 36 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

39 C R O S OS R OI A D S PROFESSORS MAS, PASTOR AND VIDELA EXAMINE THE ECONOMIC SITUATION IN 2016 Growth Expected, Albeit Moderate and Uneven M members only From left to right: Profs. Alfredo Pastor, Núria Mas and Pedro Videla, who hosted a session for alumni. laccording to the IMF, the global economy will grow by 3.6 percent this year. This increase will be uneven, as explained by Prof. Pedro Videla at a session of the Alumni Learning Program with Profs. Núria Mas and Alfredo Pastor. While the U.S. is growing at a good pace, at a rate of 2.8 percent, the outlook is different for the euro area, which will be up a mere 1.6 percent for the year. Meanwhile, emerging markets slowed in 2015 for the fifth consecutive year, although they still account for more than 70 percent of global growth, said Prof. Videla. The prospects for growth in 2016 are still hampered by the slowdown of the Chinese economy, falling commodity prices and geopolitical tensions in some of the major emerging economies, he added. Thus, China s economy is expected to grow 6.3 percent in 2016, its lowest rate in 25 years. In short, we are in a process of slow, but positive recovery, said Prof. Videla. As for Europe, Prof. Mas explained that consumption has rebounded, but prices have not. We are still living in the aftermath of the crisis, with cou- ntries that were hit hard: like Spain, which saw a 20 percent drop in GDP, Ireland (23 percent), and Greece (40 percent), she said. This recovery is slow partly due to the low productivity of the advanced economies, especially the European economies. We still haven t hit pre-2000 levels of productivity, said Prof. Mas, who attributed it largely to the aging of the population. Prof. Mas highlighted the implications of the debt crisis on the future of the welfare state in Europe: Massive funding is needed to pay for future pensions and health care. But we could turn this problem around if we shifted our spending on health and pensions, since this is one of the major budget items for our welfare states, said. During the session, which took place on February 10 at IESE Barcelona, Prof. Pastor talked about the negative impact of unemployment and low wages: The large population of unemployed people runs a very high risk of exclusion. He added that the wealthy countries have high wages, so wealth is not concentrated in the hands of a few. Luis Maroto, CEO of Amadeus. LUIS MAROTO (MBA 89), CEO OF AMADEUS Change is a must l We live with dilemmas on how to make decisions. Everything is pushing us with uncertainty. No matter what we do, we ll need to adapt into the future, said Luis Maroto (MBA 89), CEO of Amadeus, at an EMBA Global Leadership session on February 5 at IESE Barcelona. Change is a must. The problem is to find the right moment to change, he added. Maroto reflected on the trends that will impact the business world, including an increase of the middle class worldwide, the speed of technology, connectivity, new business models based on collaboration, big data, personalization, the Internet of Things, and artificial intelligence. Alumni Magazine IESE APRIL-JUNE 2016 / No

40 C R O S OS R OI A D S 2nd IPADE-IESE FOOD & BEVERAGE INDUSTRY MEETING Innovation Is the Game Changer l It gets to a point where the entire industry is offering customers the same product and the same experience. The company that comes in and shakes things up will be the favorite, said Santiago García, managing director of Comercial Mexicana. Creating an offering that doesn t exist in the market is not about money: it s about culture, he added. Innovation in the value chain and customer experience were two of the main topics covered at the 2nd IPADE-IESE Food and Beverage Industry Meeting, which took place February 18 in Mexico City under the academic direction of IESE Prof. Jaume Llopis and IPADE Prof. Eugenio Gómez. Regarding the emerging needs of consumers, Mario de Agüero, managing director of GS1 Mexico, said, consumers have a different perspective now, so companies are forced to use digital strategies to connect with them. On May 26 in Barcelona, the 20th Food & Beverage Industry Meeting will be taking place, featuring discussions on the latest innovations in the sector. Prof. Jaume Llopis; Rafael Gómez-Nava, dean of IPADE; and Prof. Eugenio Gómez, head of the food and beverage sector at IPADE. Left to right: Jesús Navarro, partner at Deloitte Spain; Mariano Marzo, professor of stratigraphy at UB; Pedro Miró, vice chairman and CEO of CEPSA; and Juan Sancho Rof (PADE 76), vice chair of the board at Técnicas Reunidas. ENERGY INDUSTRY MEETING Oil Prices and Decarbonization in Focus lthe drop in oil prices was one of the key ideas discussed at the 13th Energy Industry Meeting, hosted at IESE Madrid on February 10. The vice chair of the board at Técnicas Reunidas, Juan Sancho Rof (PADE 76), believes that lower oil prices could lead to a tax on fuel consumption, which could help fund research in the sector. There was also discussion on the emissions reduction targets agreed on at the Climate Change Conference in Paris. According to Prof. Juan L. López Cardenete, the meeting s academic director, and Jesús Navarro, Deloitte partner and co-organizer of the event, hitting those targets is a tall order: 86 percent of primary energy demand is satisfied with fossil fuels. Thus, it is essential to improve energy efficiency, as the International Energy Agency estimates that it could yield a reduction in emissions of as much as 50 percent, said Luis Aires, executive president of BP in Spain and Portugal. Another way to reduce pollution is by replacing coal with natural gas, he said. He added that a one percent change in the mix by replacing coal in electricity production would mean an 11 percent increase in renewable energy. Carmen Becerril (PADE 00), board member of Acciona, encouraged public authorities to recognize universal access to energy as a top priority. She insisted on the need to create favorable conditions for private initiatives to develop business models that allow for a sustainable supply of electricity to those most in need. Other speakers included Valvanera Ulargui, managing director of the Spanish Climate Change Office; Rafael Villaseca (MBA 76), CEO of Gas Natural Fenosa; Pedro A. Merino, chief economist at Repsol; and Alberto Nadal, secretary of state for energy. 38 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

41 WOMEN IN LEADERSHIP: STRIDES TO SUCCESS The Secret Weapon Is Women lbusinesses strive incessantly to seek out marginal gains over their competitors, whether in management, production, or customer experience. But for Prof. Nuria Chinchilla, there is some low-hanging fruit right under some executives noses: Gender balance, diversity and inclusion are simply good for business, she said. IESE s Women in Leadership (I-WIL) conference on January 27 in Barcelona brought the topic of gender balance front and center. Along with co-panelist Kathleen L. McGinn, Cahners-Rabb Professor of Business Administration at Harvard Business School (HBS), Prof. Chinchilla shared reflections with business and political leaders. For Carolina Schmidt, former minister of women s affairs and education in Chile, the business case for the full integration of women in the workplace is indisputable. Research shows that companies with a higher proportion of women at board level outperform their competitors by 42 percent, Schmidt said. Specific measures are needed, she said. Prof. Nuria Chinchilla, Mari Kuchinishi, Prof. Emily M. Nason, Inma Díaz and Cindy Cheng reflected on breaking the glass ceiling and empowering women leaders in Hong Kong. Carolina Schmidt, Carlota Pi, Eghosa Oriaikhi, Prof. Kathleen L. McGinn and Prof. Nuria Chinchilla open up the conversation on gender equality at I-WIL in Barcelona. MAKE IT A CO-ED CONVERSATION lone central theme at I-WIL was that gender equality is a shared responsibility across genders and generations. Speaking out for change is not just a women s issue; men also need to be part of the conversation, said Eghosa Oriaikhi (GEMBA 13), director of Europe, Africa, Russia with Baker Hughes. So what can businesses do to change the dialog and mine this hidden wealth? Carlota Pi (EMBA 09) co-founder and CMO of Holaluz. com, an energy supplier disrupting the Spanish market, has put gender equality at the forefront of the company s priorities. Policies such as a 90-day objective cycle, flexible working hours and the provision of day care has created a balanced ecosystem for men and women where the workforce is 50:50. STEREOTYPES AND MYTH BUSTING lprof. Chinchilla met four Asiabased leaders who shared how they had overcome barriers at an alumni event co-organized with the Chamber of Commerce in Hong Kong and the Barcelona City Council on December 2. For Mari Kuchinishi, head of Permanent Control Coordination, APAC, at BNP Paribas, effort is key to overwhelming all sorts of obstacles. Luck is about looking for opportunities, persevering and trying harder each time, she said. Emily M. Nason, associate dean of HKUST Business School and mother of three, said external criticism often provoked thoughts of quitting, but she rode it out with her mentors and husband s encouragement. Nason can take heart from research led by HBS Prof. McGinn and co-panelist at I-WIL. Her study shows that women whose mothers worked outside the home tend to earn more and hold supervisory posts. MORE INFORMATION: Alumni Magazine IESE APRIL-JUNE 2016 / No

42 C R O S OS R OI A D S THE YIELDS OF THE YOUNG TALENT PROGRAM Now it s our turn to give back what society has given us The desire of Noel Quiaoit (MBA 16) to explore new horizons led him in 2011 to sign up for the Young Talent Program to assess whether the MBA met his needs. What he ended up discovering was something far greater. lraised in a small town in the Philippines, Noel Quiaoit grew up with a tremendous intellectual curiosity. I remember being nine years old and taking computers apart to understand how they worked inside, he laughs. That turned into a passion for learning that has stuck with me throughout life. Plus, my family has always been very persistent, so that has been a model for me, he adds. An example of that spirit was the journey they undertook in 2005 to move to Canada: My parents accepted an offer to move to Toronto, largely for the opportunities that my sister and I would have. I was 17 and already studying computer engineering in the Philippines, but was forced to return to the final year of high school to equip me for the Canadian system. At that age, it was kind of humiliating, but it was vital to adapt to the language and customs. After graduating, Quiaoit worked for two years as a programmer until things began to change: Many jobs started getting outsourced. That made me think about the need to expand my education to provide more value. That s when I thought about doing an MBA. At first, Quiaoit was interested in IESE for the school s European roots and the global scope of the MBA; in the Young Talent Program (YTP), he found the ideal opportunity to experience the program beforehand. Besides being a wonderful gateway to the MBA, the YTP allowed me to experience the atmosphere of the program first-hand, become familiar with the case method and spend a few intense days alongside colleagues from around the world, he says. Quiaoit will finish the MBA program in just a few months, 50 years after the first graduating class. He says the experience has brought much more than he expected: The first year is similar to the YTP but, due to its length, you build really deep relationships. Then you continue developing technical skills but also learn a lot about yourself and face the projects with greater confidence, commitment and empathy. This has been the IESE vision for the past 50 years; it is evident in the classrooms and we re very proud to be part of this history. We are privileged and now it s our turn to give back what society has given us. In addition, this year I did an exchange at London Business School and participated in the module in Nairobi which, without a doubt, is one of the highlights of the program: you really get to understand the markets, challenges and the nature of business in Africa. The YTP has had 183 participants since it began in To date, 40 of them have gone on to do master s programs (37 MBA, 3 EMBA). MORE INFORMATION: 40 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

43 AGENDA Alumni Learning Program: International Sessions LISBON, MAY 12 & JUNE 30 BASEL, MAY 19 BUENOS AIRES, MAY 19 SAO PAULO, MAY 20 SANTIAGO (CHILE), MAY 23 TORONTO, JUNE 23 MUNICH, JULY 7 FOCUSED PROGRAMS Managing Corporate Growth: Alliances & Acquisitions Barcelona, May 3-6 Getting Things Done Barcelona, May Developing Leadership Competencies New York, May High-Performance & Creative Negotiator Barcelona, July 5-7 Alumni Reunions MBA, EMBA & GEMBA Barcelona, May 28 Industry Meetings 2nd E-COMMERCE INDUSTRY MEETING Barcelona, May 18 20th FOOD & BEVERAGE INDUSTRY MEETING Barcelona, May 26 9th SALES AND MARKETING OFFICERS MEETING Madrid, June 15 5th FAMILY-OWNED BUSINESS SUMMIT Barcelona, June 21 29th Annual Meeting of IESE s Partner Companies MADRID, MAY 10 Representatives of the more than 200 partner companies that cooperate with IESE in the development of long-term projects will meet at the Madrid campus. Other Events for Alumni Alumni can benefit from preferential rates for the various events in which IESE participates. More information: IESEAlumniAssociation@iese.edu Connexus Corporate Universities Giuseppe Auricchio, director of IESE s Learning Innovation Unit Barcelona, May Sustainable Brands Prof. Joan Fontrodona Barcelona, May Digital Enterprise Show Prof. Javier Zamora Madrid, May European HR Directors Business Summit Prof. Connor Neil Amsterdam, May 31 & June 1 Program dates are subject to change. For the latest information see: Alumni Magazine IESE APRIL-JUNE 2016 / No

44 P E O P L E ALUMNI Cristina de Parias (MBA 91) Delegation lets you get the best out of each team member Cristina de Parias received her law degree from the Universidad de Sevilla and an MBA from IESE in She also studied French language and culture at the Sorbonne. De Parias began working in the financial sector in 1988 at Banesto, before moving on to Citibank and then Argentaria, which later merged with BBV to become BBVA. She leads the company in Spain and is president of CatalunyaCaixa. A married mother of four, de Parias reflects on changes in the banking sector. How would you define the BBVA Group s business model? Our model is based on three ideas. First, we place our customers experience (65 million people in 31 countries; 12 million in Spain) and quality of service at the heart of our decisions. Second, diversification and leadership. Third, a balance between profit and principles. This means that we manage the businesses by taking responsibility for our impact on the lives of individuals and society. This model confers two competitive advantages: repeat business and structural strength. BBVA is entering the online banking sector with its acquisition of Simple in the U.S. and its stake in Atom in the U.K. How is digitalization transforming the banking market? At BBVA we ve been anticipating this transformation for some time. It goes well beyond technology. Above all, it s a cultural change. We re approaching the transformation from different angles: one is to adapt our distribution model to the multi-channel customer. We re also developing an array of digital products and services and promoting sales via digital channels. We re investing in the development of new digital business models. Our recent investment in Atom is aimed at this goal. It s the first exclusively online bank to obtain a license from the British regulatory system. It s designed specifically for these new needs and is optimized for the mobile environment. Likewise, the U.S.-based Simple is a 100-percent online banking platform, with advanced web and mobile tools, which helps customers make better financial decisions and save more. In April 2015, you were named president of Catalunya- Caixa, which was acquired by BBVA. Three years earlier the institution bought Unnim, which is the result of a merger of three Catalan savings banks. What did these acquisitions mean for BBVA? BBVA has taken advantage of the crisis in order to grow both organically and inorganically. With the acquisition of Unnim and CatalunyaCaixa (CX), we have doubled our market share in Catalonia to 25 percent, becoming the region s second-largest financial institution. And we have added two million customers. Additionally, these acquisitions have enabled us to move into first place in Spain in terms of business volume, with a statewide market share of around 15 percent. In the current context of tiny margins, size is an important competitive advantage. 42 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

45 The banking sector is being transformed, and Cristina de Parias (MBA 91), head of BBVA Spain and president of CatalunyaCaixa, is on the front line. By analyzing the industry s mergers and acquisitions, its crisis of trust and the digital revolution, she emphasizes the power of leading by example. Alumni Magazine IESE APRIL-JUNE 2016 / No

46 P E O P L E ALUMNI 7 YOU HAVE TO REALIZE THAT LIFE IS A SERIES OF CHOICES AND YOU RE NOT GOING TO BE ABLE TO DO EVERYTHING. You have worked in the financial sector for 25 years and have been on the front line throughout the crisis. What lessons can be learned from your experience? For one thing, this crisis has made clear the importance of professional management. Some institutions entered the growth race without keeping in mind the balance between profitability and risk. Also, the crisis has underlined how important it is to apply a set of values in business, especially among upper management. Managers have to be exemplary. Some unorthodox behaviors adversely affected the reputation of the entire sector. BBVA acted in accordance with its principles and this enabled us to grow in spite of the crisis. As a consequence, Spain s entire financial system has undergone a major restructuring, in terms of capacity, efficiency and number of actors. Also, management and governance models have been professionalized and new regulatory measures have been introduced to restore confidence and to minimize the use of public resources in future crises. In this context, the system is facing two important challenges: driving profits and regaining society s trust. What should the banking sector do to regain credibility? Has consumer confidence improved? Although different banks behaved in diverse ways, the poor management of a few affected the credibility of the entire sector. Society should know that not all institutions acted in the same way. BBVA has always prioritized a strict code of conduct and a set of principles that are ingrained into the culture and the behavior of the entire workforce. In fact, BBVA Spain leads in reputation metrics including recommendations of the company and lowest number of claims. Even so, we are redoubling our efforts in transparency, quality of service, best practices and financial education. What do you think is the key to success in the banking sector? It lies in people and teamwork. It s about instilling a commitment to the established goals, regardless of the area or role of any given person. The financial sector has changed a lot in recent years and in order to move forward it is essential to have the ability to adapt to the environment, to transform yourself and to reinvent yourself. The core of the entire strategy has to be the customer and the customer s needs. At BBVA we are developing a new customer relations model that will be better adapted to the demands of our customers, combining physical presence with remote and digital communication. We think that increasingly customers will choose how they want to interact with the bank and we have to continue to develop different options. What is the best career advice that you have received? I will mention the ones that I try to apply in my daily life. One, lead by example. Your teams have to see your personal commitment to the business objectives and that you practise what you preach. Two, trust your team. Delegating lets you get the best out of each team member. Three, never lose your ability to keep learning and listen carefully to your people. Keep your ear to the ground; for example, by visiting branches. Which of your own mistakes has taught you the most? You can always learn from mistakes. I m naturally optimistic. When something goes wrong, I don t try to assign blame. Instead, I look for lessons. The important thing is to accept mistakes without drama and to look toward the future. Anglo culture values mistakes and the digital world is a trial-and-error ecosystem. They use the expression fail fast and fail cheap. I think we could all learn from this advice. What values or virtues do you most appreciate in your colleagues? And in your supervisors? How can they be encouraged and strengthened? I value the same traits in both. The values that I most appreciate are customer orientation in decision-making; the ability to work in a team; a healthy ambition to want to do things better, to learn and to progress; and optimism, the desire to have fun at work. Additionally, I value in leaders the ability to lead by example, to act with humility and to work closely with their teams. We have to show a clear attitude of service to our teams, creating channels for the exchange of ideas and opinions, and promoting participation and communication. You completed the MBA at IESE, graduating in What impacted you most from that experience? 44 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

47 Academically, the case method, in which the student is at the center of the learning process. To be continuously resolving problems from real situations in which the goal isn t arriving at the answer but rather learning to ask the right questions, to make decisions in uncertain environments and then to carry them out. Throughout my professional life I have taken lessons from situations that I analyzed in the classrooms of IESE. IESE also brings you into contact with people from other cultures, who come from different educational and professional backgrounds. These people have different ways of understanding life and the business world, and that also helps you become a more open-minded and complete person. Now that the MBA is celebrating its 50th anniversary, what advice would you give to a recent program graduate? On one hand, that they be open to different challenges, without holding a preconceived notion of their professional future. On the other hand, that they take advantage of their capabilities and their areas of expertise and move their career in those directions. Along the way, they should make positive contributions and have fun; they should work where they feel most comfortable. Also, they should remain open to the values of the company and the team and be aware that learning never ends. In your career, what difficulties have you encountered as a woman? You are the mother of four children. To what extent have you been able to balance work and family life? Do you have any practical advice? It s not easy to combine work and family; it takes a lot of will power. The important thing is to find a personal balance, which is different for everyone. There s no magic recipe. It s essential to surround yourself with a good team, at work and at home, and to keep it going over time. Also, you have to realize that life is a series of choices and you re not going to be able to do everything. It s important to stay optimistic. The motto Each day has enough trouble of its own has been really helpful to me. I focus on the present so that I can give my best every day. Alumni Magazine IESE APRIL-JUNE 2016 / No

48 P E O P L E RESEARCH EXCELLENCE AWARDS PROFESSORS MAKING AN IMPACT The IESE Alumni Association handed out the 2015 Research Excellence Awards in recognition of the work of professors Sebastian Reiche, Rafael Andreu and Vicente Font. lfor the 14th Research Excellence Awards, in the case of publications, the jury made its decision based on the international impact on the areas of research and business; while, with regard to courses, it considered continuity over time, contribution to the professor s research activity and the use of original, targeted teaching materials. The award for the best scholarly article went to Prof. Reiche for Why and How Does Shared Language Affect Subsidiary Knowledge Inflows? A Social Identity Perspective, featured in the Journal of International Business Studies, the official publication of the Academy of International Business. The study, based on a sample of 817 subsidiaries, shows that the use of a lingua franca in companies facilitates the flow of information between headquarters and subsidiaries. It looks at how this boosts performance and promotes a common identity throughout the company. The prize for the best book published went to Prof. Andreu for Huellas: Construyendo valor desde la empresa. It focuses on how the spontaneous learning that occurs in the normal operations of an organization can be channeled positively to improve the performance of managers. Prof. Font received the award in the category of best course for Marketing, Planning and Implementation, which is part of the Executive MBA curriculum. On behalf of the three awardees, Prof. Andreu expressed deep gratitude for the recognition. Receiving an award from the alumni is the best recognition for any professor, he said at the awards ceremony on February 8, which took place during the meeting of the Alumni Association s Governing Board. Staying on track is not easy, and the Association helps us do that through these awards, by charting the course and steering clear of passing fads, added the professor. Receiving an award from the alumni is the best recognition for any professor The jury for this year s Research Excellence Awards included professors Marta Elvira and Julián Villanueva, Alumni Association Executive Committee members Alejandro Beltran (MBA 98) and Antoni Esteve (PDD 87 and GCP 13), and the president of the Alumni Association Jorge Sendagorta (PADE 90). In order to reward excellence and support the school in the development of research and teaching on business management, the Alumni Association created these awards during the academic year. Since then, the awards have been given out annually and include a prize of 10,000 each. The three award-winning professors: Sebastian Reiche, Rafael Andreu and Vicente Font. 46 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

49 P E O P L E JAIME CARUANA, GENERAL MANAGER OF THE BANK FOR INTERNATIONAL SETTLEMENTS AN ECONOMY IN TRANSITION What is the current situation of financial markets? The question was asked by Jaime Caruana, general manager of the Bank for International Settlements at an MBA Global Leadership Series session. lthe Bank for International Settlements (BIS) disagrees with those economists who predict that digitalization will lead to stagnation, reduced productivity and faltering growth. It does not share their belief that the new normal will be characterized by the likes of quantitative easing and low or even negative interest rates to boost aggregate demand. Caruana explained the BIS s opposing position: We don t see the future necessarily being defined by low productivity or by central banks using unconventional monetary policies. What we see is a balance-sheet recession which we believe is not the new normal but rather a transitory phase in the global economy. Although he rejected techno-pessimism, he nonetheless called for caution in making firm projections about the global economic outlook. It s incumbent on economists to assess every scenario; and to do so realistically especially given our recent economic history, Caruana said. DEBT AND SYSTEMIC RISK lthe current recession is the result of too much debt, said Caruana. And key to strengthening Jaime Caruana at IESE s Barcelona campus. the recovery is deleveraging. A longterm view, said Caruana, is needed to address the issue of the stock of global debt, and part of this, he argued, is tackling systemic risk. Finding ways to combat systemic risk is difficult and ever more pressing. Something the current crisis has taught us is that strong institutions are no protection against a problematic financial system. The BIS has called for banks to increase their capacity to reduce risk, said Caruana, which requires that they have larger capital buffers. The derivatives market too should be much more robust something that can be achieved through greater centralization, he added. Caruana also pointed out additional risks that were developing, including some aspects of algorithmic trading and the increasing trend for some asset managers to use leveraging tactics. According to Caruana, the best solution at both a macro- and a micro-economic level is to reduce debt and ensure that organizations maintain flexibility through liquidity. Caruana also highlighted the toobig-to-fail phenomenon, and said that national governments should be more selective about which banks are bailed out with taxpayers money. A reliable financial system depends on public confidence and that confidence has been repeatedly dented in the wake of the crisis. Trust needs to be rebuilt if the financial system is to function as it should, he said in a session held on March 7. Alumni Magazine IESE APRIL-JUNE 2016 / No

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51 P E O P L E DANIEL FRANKLIN, EXECUTIVE EDITOR OF THE ECONOMIST, SHARED 12 KEY AREAS FOR THE 2016 HEADLINES THE DOMINANT DOZEN lwho and what will take center stage in world news this year? Daniel Franklin, executive editor of The Economist, gave his expert opinion at a session of the Alumni Learning Program on IESE s Madrid campus on February 9. M members only 12. POWERFUL WOMEN Women who will set the agenda in business, education and politics include Angela Merkel, chancellor of Germany; Janet Yellen, 15th Chair of the Federal Reserve; IMF director Christine Lagarde; and Dilma Rousseff, president of Brazil. Sharing the headlines will be: Malala Yousofzai, education activist; political activist Aung San Suu Kyi in Myanmar; Taiwan President Tsai Ing-Wen; Nicola Sturgeon, Scotland s first minister; and Marine Le Pen, candidate for the 2017 French elections. 11. BUZZWORDS IN VOGUE Some words for this year will be autonom, a neology describing the driverless car; handy, a new word for smartphone; and LDL (Let s Discuss Live), as it s better to talk in person as the information is classified. Also millennialization, which means businesses adapting to Millennials and organoids, that are artificial body parts that could be used for drug testing and similar. 10. TOP TEN FASTEST-GROWING ECONOMIES Franklin s ranking (in alphabetical order): Bhutan, Cambodia, Democratic Republic of Congo, India, Ivory Coast, Laos, Mozambique, Myanmar, Sierra Leone and Turkmenistan. From left to right: Prof. Juan J. Toribio and Daniel Franklin, executive editor of The Economist. 9. THE NINE-DASH LINE Another name for China s post-world War Two maritime map that divides up the Pacific Ocean. Franklin predicts that China may exploit uncertainty around the U.S. elections, to become more assertive in its territory. 8. NOTEWORTHY ANNIVERSARIES Franklin mentioned some anniversaries as 400 years since Shakespeare s death, 75 years since Pearl Harbor, 50 years of the Super Bowl, 15 years of Wikipedia and 10 years of Twitter. 7. ORTHODOX CHURCH COUNCIL THE LARGEST SINCE 787 The first major council of Orthodox churches since 787 is due to be held in Crete as political tensions between Russia and Turkey persist. 6. IS 6.9 PERCENT THE NEW NORMAL CHINESE GROWTH RATE? Despite pessimistic predictions following 2015 s slowdown, China s economy has room to grow, says Franklin. 5. THE FIVE OLYMPIC RINGS Five clouds not rings hang over Rio s hosting of this year s Olympics. The Zika virus, corruption, an economic crisis, water pollution and fears over Olympic installations and infrastructure being ready on time. 4. FOUR DILEMMAS FOR EUROPE The current euro crisis lull might not last, as Greece and Italy could flare up again. There s pressure to decide the fate of the Schengen area in the context of the migrant crisis. The continuing threat of Islamic terrorism and tension along Russia s borders make the region more volatile. A Brexit referendum also looms. 3. THREE TIMELY AGREEMENTS The FARC agreement in Colombia, and Cypriot, Greek and Turkish leaders near-accord send out powerful messages of global peace. Iran s nuclear deal needs monitoring, while its rivalry with Saudi Arabia continues. 2. AND I.S.? Will the so called Islamic State be defeated on the ground in Raqqa and Mosul? And where and how will terrorists strike? 1. WHICH ONE U.S. CANDIDATE WILL BE LEFT STANDING IN NOVEMBER Will Trump triumph? Does Sanders have a chance? Or will Hillary Clinton become the first woman president of the U.S.? Stateside politics will hog the limelight in the coming months. Alumni Magazine IESE APRIL-JUNE 2016 / No

52 ENTREPRENEURS: PEP GARCIA (MBA 91), FOUNDER OF MAXCHIEF THE ENTIRE WORLD IS OUR PLAYING FIELD In the middle of the financial crisis, Pep Garcia (MBA 91) found himself unemployed for the first time in his life. He chose to seize the moment and unleash his entrepreneurial spirit by starting a company selling nothing more complicated than tables and chairs. lthe words of Pep Garcia flow like a waterfall. His mind works quickly, but stays in the present. He lives in the here and now, and does so at breakneck speed with infectious enthusiasm. Without that feverish pace, there is no way he could be general manager of Maxchief Europe, president of the academic council of the Marketing Club of Barcelona, director of the Catalan Association of Executives, Managers and Entrepreneurs (ACEDE) and trustee of Fundación para la Creativación. All of these roles require not only energy, but also a strong calling. I think that as companies we must contribute more to society than just economic transactions and devote part of our time and resources to any cause that we consider to be worthy. The ultimate goal isn t to make money, but to be happy, he said. With a bachelor s degree in economics and an MBA from IESE, he had a successful career in the public sector, the mass consumer sector, consulting and industrial design Pep Garcia in the offices of Maxchief Europe in Barcelona. until 2008, when he unexpectedly lost his job: I was out of work for the first time in my life. But it was also a moment to stop for the first time and ask myself what I wanted to do with my life, he says. Taking advantage of all the knowledge he had gained about industrial design, exports and the Asian market, he channelled his perennial entrepreneurial urge into a project that started from scratch and now exports to more than 70 countries. We re an SME with European and Asian capital. We re associated with the world s best manufacturer in China and produce top-quality folding furniture for the professional events market. Our success comes from providing the best product on the market with a very attractive design, innovating in every way that we can, and understanding that globalization means accepting that the entire world is our playing field. It s about knowing the market and meeting its needs, rather than trying to export what you already do at home, explains Garcia. Solidifying the company also has provided significant challenges and lessons: The thing about entrepreneurship is that you make a lot of decisions for the first time and learn a lot doing it. Things as harmless as choosing an office, computer system or warehouse. Then suddenly you have the opportunity to design your own corporate culture, your mission, your climate, your flexibility or your transparency. In this process, experience is a great asset because you can fix what you didn t like in the past. Starting a business is not the same as developing one. Both are needed, but it s important to make that distinction, he concludes. MORE INFORMATION: 50 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

53 THE VILALTA FAMILY: STRENGTH IN NUMBERS WE SPEAK THE SAME LANGUAGE AS IESE lit s almost dinnertime on Friday evening. Although these three members of the Vilalta family have had a challenging working week, they are happy to start the weekend together talking about their careers and the impact that IESE has had on their lives. Germán Vilalta (MBA 82) has run his own industrial supply company, Durcorit, for more than 15 years. He took over the company from his father after a long career that took him all over the world. I grew up in a family that was closely linked to business, so company management was always my priority when I studied economy and law, and later when I did an MBA at IESE. Over the years, after a lot of traveling, I realized that my true calling was managing my own business. I know that I gave up lots of things that being in senior management offered me, but I m very happy with the path I ve chosen, says Germán. His son Miguel Vilalta s (MBA 14) passion for business also developed from early childhood. In a sense, business is something that was instilled in me at home, he explains. I was impressed by the stories my father told about his time at IESE. His enthusiasm was contagious. When I was ready, I did the MBA with the goal of connecting more closely with the business and the product. I realized this goal when I started a development program at Mango. I ve been working there for two years, currently as a business development consultant. Isabel Vilalta (EMBA 17) recalls with a smile, We ve always heard business talk at home; you soak it up. Even in my school yearbook I wrote that when I grew up I wanted to start my own business with my brother Miguel. She is now a project manager for Privalia. SECURITY, OBJECTIVES AND VALUES It was always clear to me that I l needed to carry out postgraduate studies to complete my education, and IESE was an excellent choice, notes Germán. My graduating class was the first to undertake the MBA only in English, with a much more international feel. It was a fantastic program, which, first of all, gave me confidence that I had a unique perspective. It also helped me meet my goal of starting my own business, showed me that there s no place for selfishness and taught me never to give up. When I came out of my first EMBA class, I remember that I called my mother and told her that I didn t Germán Vilalta at home in Barcelona, with daughter Isabel and son Miguel. know exactly why, but that I was really happy, explains Isabel. I m not even halfway through the program, but I can already say that it has given me a 360-degree perspective, an incalculable amount of personal development, and a very intense humanist focus, both in the classroom and during group work. I hope the EMBA will help me to continue growing in Privalia and eventually to launch my own business. The MBA enabled me to gain confidence in myself and reach my goal of working in Barcelona in a multinational company that would allow me to advance and to be close to the product, explains Miguel. Also, IESE represents the values that we grew up with, like the importance of teamwork. That s why I felt fully integrated from the beginning; we speak the same language, and we understand each other perfectly. Alumni Magazine IESE APRIL-JUNE 2016 / No

54 P E O P L E AUTHORS Time to Apply Strategy to Sustainability MIKE ROSENBERG Strategy and Sustainability PALGRAVE MACMILLAN, 2015 lbusiness and environmental sustainability are not natural bedfellows. Business is about making money. Sustainability is about protecting the planet. To some activists, all executives are exploitative, selfish 1 percenters. To some executives, all activists are irresponsible, unyielding extremists. And yet ignoring the issue is not an option all businesses must have a strategy to deal with sustainability and, like any strategy, this involves making choices. Strategy and Sustainability encourages its readers to filter out the noise and make those choices in a realistic and clear-eyed way. Prof. Mike Rosenberg s nuanced and fact-based point of view recognizes the complexity of the issues at hand and the strategic choices businesses must make. He blends the work of some of the leading academic thinkers in the field with practical examples from a variety of business sectors and geographies and offers a framework with which senior management might engage with the topic, not ( just) to save the planet but to fulfill their short-, medium- and long-term responsibilities to shareholders and other stakeholders. Prof. Mike Rosenberg. Prof. Rosenberg s blog ( iese.edu/doing-business) examines these and other strategic aspects of business. How to Value a Company? PABLO FERNÁNDEZ Valuation and Common Sense SOCIAL SCIENCE RESEARCH NETWORK, 2015 Digital book available at: lin order to carry out a company valuation, basic technical knowhow is needed. But, first and foremost, one must have common sense and ask questions that address obvious issues. What does the company do? Why is its valuation being carried out in a given way? For what purpose and for whom is the valuation being conducted? Prof. Pablo Fernández. Valuation and Common Sense, by Prof. Pablo Fernández, provides the tools needed to assess any company, no matter how complex, and the know-how essential for understanding the various valuation methods. The book addresses well-known cases and more than 100 mistakes, and features charts and figures to help readers grasp the concepts that are explained. Prof. Fernández argues that the only conceptually correct system for evaluating an ongoing company i.e., one that is not being liquidated is the discounted cash flow. This method is based on a detailed forecast of all sources of positive cash flow (sales, divestments, and so on) and negative cash flow (payments to suppliers, administrative and staff costs, taxes, loan repayments, and more). 52 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

55 INNOVATION AND LEADERSHIP How to Develop Full Entrepreneurial Potential JORDI CANALS Shaping Entrepreneurial Mindsets PALGRAVE MACMILLAN, 2015 lcompanies need to innovate and leaders need to act entrepreneurially. The challenge is how to develop those capabilities. That is the main question behind the 2015 book edited by IESE s dean Jordi Canals. It brings together deans and professors from leading business schools to set the course for developing managerial capabilities that encourage innovation and entrepreneurship as the times require. Shaping Entrepreneurial Mindsets: Innovation and Entrepreneurship in Leadership Development addresses the formal process of developing innovation in management, which still lags behind the demand for it. The threat of disruptive innovation, especially from digital transformation, is real. At the same time, the population is aging, demand is slowing and global competition is heating up. Stability is not an option for even the most successful companies today. They have to innovate with the agility of a startup, getting new offerings to market quickly and nimbly. The book is intended to help CEOs and senior managers at established companies prepare for the Prof. Jordi Canals reflects on innovation and entrepreneurship. uncertain future armed with innovation and entrepreneurial competencies (IEC). CEOs do not need to be the most creative people to be effective leaders in backing innovation, Prof. Canals writes. But they need to know how to give support to innovation and entrepreneurship, as well as to the development of IEC to make the organization more effective in introducing successfully new ideas to renew it. The book, in four parts and 12 chapters, lays out how to go about it. In Part I, Prof. Canals sets the stage with two frameworks for developing leadership capabilities. The first lays Stability is not an option for even the most successful companies today: they have to innovate out four key leadership competencies to develop: knowledge, capabilities, skills and attitudes. The second helps divide a CEO s agenda into four key areas of consideration: context, ideas, people and structure (CIPS). Entrepreneurship and innovation are not only a must for companies to succeed in the future but a source of great joy not only effort for all the people involved in it, Prof. Canals says. The book also includes contributions from IESE Professors Bruno Cassiman, Antonio Dávila, Pankaj Ghemawat, Pedro Nueno, M. Julia Prats, Joan E. Ricart and Eric Weber. Alumni Magazine IESE APRIL-JUNE 2016 / No

56 L I F E Brussels London New York Cologne Munich Frankfurt Paris Miami San Francisco Warsaw Vienna Milan Andorra la Vella Mexico City Bogotá Lima Sao Paulo THE LATEST ON IESE S ALUMNI CHAPTERS CHAPTER NEWS Hong Kong DECEMBER 2 same name, with a session led by ISE Prof. Rubens Migliaccio and Dudalina president, Sônia Hess. focused on Latin America and the outlook for Brazil. The session was moderated by ISE Prof. Fernando Bagnoli. FEBRUARY 23 Bogotá Prof. Nuria Chinchilla led a session in Hong Kong titled Breaking the Glass Ceiling! Empowering Women Leaders. The session highlighted and analyzed the growing presence of women in top management. The regional chapter of alumni in Brazil organized a conference on the future of the human resources sector, which took place at ISE Sao Paulo. Sao Paulo JANUARY 28 l DECEMBER 2 ISE Business School in Sao Paulo hosted the launch of the Dudalina case, about the textile company of the l 54 APRIL-JUNE 2016 / No. 141 l Zeina Latif, chief economist at XP Investimentos, and Prof. Pedro Videla were at ISE to lead a session on global macroeconomics, which l DECEMBER 5 IESE alumni in Colombia were invited to visit the BD Bacatá, the country s tallest building. l FEBRUARY 9 Mauricio Jou, managing director of Würth Colombia, led a session in Bogotá titled Würth: 10 años de l Alumni Magazine IESE

57 MORE PHOTOS OF THE SESSIONS: NEW PRESIDENTS REGIONAL CHAPTER IN FRANCE Axel Lambert de Rouvroit (MBA 01), managing partner in Health Security Associates, has been named the new president of the regional chapter of France. Since 2009, the chapter in France has been led by Gloria Perrier-Châtelain (EMBA 93), who has organized a large number of events and helped foster the sense of belonging to the Alumni Association and the school among those in Paris. The regional chapter in France is very active, with a regular calendar of social and academic events. It gives us so many opportunities, and it s an honor for me to contribute to its development as president, Lambert de Rouvroit explains. I have been a volunteer with the Association s Regional Committee for the past six years. I see it as my way of trying to give something back to IESE for everything it has given me, he says. l Shanghai Hong Kong New Delhi REGIONAL CHAPTER IN THE UNITED KINGDOM Paco Ybarra (MBA 87), global head of markets and securities services at Citi, is the new president of the regional chapter in the United Kingdom. Ybarra succeeds outgoing president Chris Daniels (MBA 00), head of partnerships and communication at Hybrid Air Vehicles, who has led the chapter for the past decade, promoting its consolidation and growth. It s an honor for me to head up the UK IESE alumni chapter, says Paco Ybarra, who was presented as its new president at an event on January 19 in London. The community of IESE alumni in the UK is more than 700 people strong. I d like to help open the door to create connections between them and the school. I also invite all the alumni who travel frequently to London to come participate in our chapter s activities. We have events with notable speakers and professors from the school, says Ybarra. l crecimiento en Colombia ( Würth: 10 Years of Growth in Colombia ). Mexico City DECEMBER 8 Prof. Santiago Álvarez de Mon was invited to the alumni breakfast in Mexico s capital city, where he gave a lecture titled Aprendiendo a vivir en la incertidumbre ( Learning to Live With Uncertainty ). l JANUARY 29 A new alumni gathering in Mexico City featured the l Alumni Magazine IESE participation of Francisco N. González, general manager of ProMéxico, who reflected on the current economic situation and the challenges facing Mexico. together for a Christmas dinner in Shanghai. Shanghai l DECEMBER 8 The regional chapter in China invited alumni to get l Warsaw DECEMBER 9 Marek Kaminski (AMP 08), explorer and entrepreneur, was featured at the Christmas event organized by Poland s regional chapter in the nation s capital. APRIL-JUNE 2016 / No

58 L I F E Attendees at the February 9 session in Bogotá. 2. Session with Prof. Antonino Vaccaro in Frankfurt. 3. Prof. Marc Sachon, in Cologne. 4. Reflections on the health sector, in Milan. Lima Inter-school Event in Mexico City MARCH 2 IESE alumni organized the first inter-school event in Mexico City l on March 2, and brought together 220 alumni from the world s top business schools. IESE alumni shared impressions with alumni from Harvard Business School, Columbia Business School, Yale School of Management, University of Chicago Booth School of Business, the Wharton School and MIT Sloan School of Management. The event, promoted by Natalia Muñoz (EMBA 13) from the regional chapter of IESE Alumni in Mexico, was rated highly by attendees and is likely to be repeated. DECEMBER 10 lalumni had their last gathering of the year, a Christmas dinner, in the Peruvian capital. 2 4 Frankfurt JANUARY 14 lgerman alumni gathered in Frankfurt, where Prof. Antonino Vaccaro gave a lecture titled The Trial of Business Ethics: Why Many People Are So Skeptical About It. Brussels JANUARY 18 lthe regional chapter of Belgium and Luxembourg hosted a dinner to celebrate the 2016 new year. New York JANUARY 20 lthe so-called digital transformation has had an impact on all sectors and levels of economic activity. We now have enough perspective to draw a series of conclusions from some of the successes and failures that we have witnessed. On the New York campus, Prof. Josep Valor presented ten paradigmatic cases and looked at what we can learn from them and what can be applied to our businesses. San Francisco JANUARY 25 lin recent years, a wide variety of physical objects have been connected to the Internet (thermostats, lighting, watches, car systems, turbines, and so on). This has been referred to as the Internet of Things. The phenomenon goes beyond remotely monitoring and controlling individual items. Objects are integrated and combined with other things, people and companies, in turn encouraging the creation of a wide range of services and the programming of the physical world. Prof. Javier Zamora analyzed this trend, which is blurring the border between the physical and digital realms. Miami JANUARY 27 lin a session titled The Economy and the Markets: Where We Are and Where We Are Going, Prof. Javier Estrada analyzed the current situation of global markets, highlighting some of the key implications for businesses and investors. He also underlined the major environmental challenges, 56 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

59 MORE PHOTOS OF THE SESSIONS: Munich DECEMBER 3 lthe distribution and mobile payments sectors were used as examples by Prof. Sandra Sieber to illustrate how digitization will affect businesses in the coming years. While distribution has undergone radical transformation, the anticipated changes in the mobile payment sector have yet to materialize. FEBRUARY 2 lthe executive director of Environmental Programs for GE Capital International, Jacob Drejer, and the CEO of Smart Hydro Power, Karl Kolmsee, led a talk at the alumni meeting in Munich on entrepreneurship in the energy sector. The session was moderated by Prof. Christoph Zott. particularly how companies and investors should position themselves to respond to those challenges and invest in the most beneficial way. Cologne JANUARY 28 lis having outstanding efficiency in processes enough to rise above the competition? In a session titled Outperforming Competition with Operational Excellence, moderated by Prof. Marc Sachon, Athanasios Titonis (AMP 13) responded to this question by drawing on a new case study about the Cologne/Bonn airport, where he is the general manager. Milan FEBRUARY 16 lalumni gathered in Milan to attend a presentation on the relationship between the economy and healthcare, and the transformation under way in the health sector. The talk, organized London JANUARY 19 lthe headquarters of EY in London hosted the session Some Advice to Manage Your Portfolio, led by financial expert Francisco García Paramés (MBA 89) and Prof. Javier Estrada. The talk was structured as an essential guide for investors, offering a framework for economic analysis and discussion on real estate and equity investment. The speakers focused especially on the distinction between active and passive management, and suggested some tips on how to choose between different types of funds. Alumni Magazine IESE APRIL-JUNE 2016 / No

60 L I F E LEARNING FROM A LIFE FULL OF CHALLENGES At the celebration of the 50th anniversary of the MBA in New Delhi on December 5, Anu Aga shared experiences of perseverance in the face of loss and failure. The former president of the Indian engineering l powerhouse Thermax shared her experience with alumni at a session attended by Prof. Heinrich Liechtenstein. From a young age it s helpful to internalize that loss, separation and failure are built into our lives. Every so-called misfortune, every rejection or loss teaches us profound lessons, if we allow life to be our greatest teacher, said Aga. To put her ideas into context, Aga told the story of her own life, beginning with her childhood in Mumbai, when she was told not to think about anything beyond getting married and having children, despite earning better grades than her two brothers. The brothers were encouraged to join the family business. Ultimately, it was her husband, Rohinton Aga, who ended up becoming president. When she finally joined the company, she pursued a postgraduate degree in social work, and climbed the ranks for five years to become head of human resources in RESPONDING TO MAJOR CHALLENGES Then she faced the first of her great challenges : her husband suffered a heart l attack. He suffered brain damage, explained Aga, but through determination he learned to write again, starting with ABC and 123. Within two years he led delegations from a business association, he authored a book. The lesson was: never take an expert s opinion as final, but have faith in yourself. As head of HR, Aga said she knew little about the core components of the business, but she had already decided to learn when her husband suffered another heart attack and died. She was named executive chairperson of Thermax, and had to endure difficult times as the stock fell amid national economic downturn in India. Despite resistance from the other board members, she hired an external consultant, reconstituted the board of directors and cut out many non-core businesses. We brought in a performance culture, rekindled innovation and customer focus, she explained. In 2004, Aga retired as executive chairperson, succeeded by her daughter, Meher. So why leave when things were going well? I d always advocated smooth succession-planning when I was in HR. Now I had to walk my talk, she said. Aga shared her vision of business with alumni, one that is very present in the MBA program after a half century: A business cannot survive without growth, said Aga, but if growth is its only purpose then it should die, for it no longer has a reason to exist. She encouraged alumni to: aim high, challenge yourself, invest in yourself and live a life rich in experiences and deeper meaning. 58 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

61 MORE PHOTOS OF THE SESSIONS: in collaboration with the official Spanish Chamber of Commerce in Italy, was led by Alessandro Lattuada, country manager of Almirall in Italy, and Prof. Núria Mas. London FEBRUARY 18 lthe regional chapter in the United Kingdom rekindled the social initiative Bar of the Month, with a gathering in London, led by Arina Palchik (MBA 12). FEBRUARY 25 la high percentage of negotiators express regret over not having done a better job managing the negotiation process. One of the main reasons is not knowing how to properly manage the conversational aspect of negotiation, which requires strong skills in the field of improvisation. In the session Improvisation: An Essential Skill for Negotiation, lecturer Kandarp Mehta shared some practical exercises to refine these skills and apply them in context. Paris FEBRUARY 18 lin the French capital, Xavier Lepage, managing partner of Swield & Advisory Services, gave a lecture titled New Strategic Thinking: What Economic Intelligence Can Bring. Andorra la Vella FEBRUARY 24 lthe human species is undergoing a period of exponential development. Increasingly, natural selection is given more nuance by technical and cultural selection. The society we must build is not possible unless we ask ourselves where we want to go. Eudald Carbonell, archaeologist, managing director and vice president of the Atapuerca Foundation, raised this debate and possible answers in the lecture titled Humanos: hacia dónde vamos? ( Humans: Where Are We Going? ) moderated by Prof. Josep M. Rosanas. Vienna FEBRUARY 26 lin the session What Global Leaders Really Need, Prof. Sebastian Reiche examined the skills and abilities needed by effective leaders, regardless of the context in which they operate. ENTREPRENEURS PDD-1-06 Agile Content, a company founded by Hernán Scapusio (CEO) and Mónica Rayo (CTO), has debuted in the Spanish alternative stock market (MAB). It is a technology group that develops software applications geared toward the production and distribution of content and interactive services in digital media. PDD-5-03 Jordi Boza has founded Remote Eye, a start-up he is directing that uses augmented reality glasses to offer remote video technical support. The company has been selected by Wearable World to join their incubator, and by Techstars, who have invited them to give a presentation to their investors during the CES trade show in Las Vegas. PDD-D-04 Miguel Munilla has founded Debuencafé, which markets coffee capsules, giving customers the unique option to buy them for a lower price by accepting advertising to be included on the packaging. It also allows companies to use this medium to retain and incentivize its customers, distributors and employees, in a novel, original and economically productive way. PDG-C-09 Cashlog (part of the NTT DoCoMo group), whose CEO is Luis Domínguez, has signed an agreement with ALSA to give customers the option to charge their bus tickets directly to their online account. The initiative includes all of Spain s major mobile carriers. Alumni Magazine IESE APRIL-JUNE 2016 / No

62 L I F E YOU RE IN THE NEWS ARE YOU IN THE NEWS? We are interested in all your latest news. Send your comments to revista@iese.edu IF YOU ARE AN ENTREPRENEUR Don t forget there is a group on LinkedIn IESE Entrepreneurs & Venture Capital Hub AMP-BRASIL-06 Roger Solé was named global head of marketing at Sprint. EMBA 92 Álvaro Huete was named deputy head of global finance and head of global finance for the United Kingdom at Société Générale. EMBA 99 IBM named Luis Gutiérrez- Jodra (who had previously been the general manager of IBM Global Financing for Spain, Portugal, Greece and Israel) its new vice president of sales for technical services in Europe. MBA 86 Gustavo Lopetegui took over the secretariat of public policy for the Cabinet of Ministers of the Government of Argentina. MBA 93 The board of trustees of the thinktank Institución Futuro named Belén Goñi president of the entity. MBA 97 The former president of AstraZeneca Brazil, Eduardo Recoder, was named the company s new country president for Spain. MBA 99 Josep M. Bagudà was named managing director of the tourism group SERHS Tourism & Hotels. MBA 00 Juan Naya was recently promoted to the position of CEO of ISDIN. MBA 06 José Buch was named associate director of Alpha Consulting, a firm specializing in the area of operations. MBA 07 Claudia Gómez was named executive director of Banco Santander in the area of Global Transaction Banking. PDD-1-09 Eurofragance appointed Marta Moseguí as its new global director of human resources. PDD-2-13 Joan Sanjosé is the new general manager of Rösler International. PDD-B-03 Alberto Granados was named vice president of the enterprise and partner group of Microsoft Corporation for Asia. AMP 13 The life of an executive often involves the challenge of keeping a balanced and healthy diet for the body and mind. Factors such as constant travel, dining out and working under pressure create a difficult atmosphere, both internally and externally, for the body to maintain healthy habits. Gabriella Kindert (AMP 13), who is no stranger to this lifestyle, shares her secrets for overcoming these challenges in The Busy Executive Diet. 60 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

63 MORE PHOTOS OF THE SESSIONS: YOU RE IN THE NEWS PDD-B-05 Jaime Bouza is the new general manager of Oxyion Europe. PDG-2-10 Jordi Balsells, who has been vice president of Desigual for Asia, is now responsible for managing the company s business in the Americas. PMD-1-08 The board of directors of Direct Line Germany approved the nomination of José Ramón Alegre as the company s new CEO. WELCOME TO THE ALUMNI ASSOCIATION EXECUTIVE EDUCATION GRADUATIONS AMP Brazil 2015 President: Rafael Vieria Teixeira Vice-president: Daniel Tiraboschi PMD 2 Brazil 2015 President: Rodrigo Simonato Vice-president: Andréia Gomides Alumni Magazine IESE APRIL-JUNE 2016 / No

64 I E S E & YOU GOVERNING BOARD OF THE ALUMNI ASSOCIATION A MORE INTERACTIVE, GLOBAL ASSOCIATION It is quite remarkable that an Association founded more than 50 years ago continues to thrive and serve its members with the same energy and passion as when it was created, writes Jorge Sendagorta (PADE 90), president of the Alumni Association, in the Association s annual report, which was approved along with the academic year s balance sheet during the meeting of the Governing Board. The event, which brought together more than 150 class presidents and vice presidents and representatives of regional chapters, took place on February 8 at IESE Barcelona, and was simulcast live via videoconference in Madrid. Highlighted innovations and future plans for IESE and the Association were also presented, including the redesigned Alumni Learning Program, the new career advising service, and the Alumni app project. Javier Muñoz, the Association s director, discussed the features of the new Alumni Learning Program, which enhances the Association s global presence with the Alumni Digital Series, combining face-to-face and online education and thereby enabling alumni to participate in sessions from anywhere through a virtual platform. In addition, alumni looking to define their own professional strategy can benefit from career advising, a personalized service with an international presence. In , there were 330 sessions held around the world; we anticipate it will go up to about 1,500 this year, said Muñoz. Another announcement related to career support involved the new mentoring service for alumni to develop professional networks to exchange advice and help one another. Also, a new app will soon be available to facilitate communication among alumni. Participants showed considerable interest in these new developments and made suggestions that included starting up internal fundraising activities to support the school. IESE s dean, Prof. Jordi Canals, was thankful for the suggestions and the support that the alumni give to IESE. He stressed the importance of continued efforts to increase the school s global presence while maintaining the focus on people. We can t get complacent. We have to try to improve the society we live in. Also during the event, scholarships were presented to MBA students and the Research Excellence Awards were given to Profs. Rafael Andreu, Vicente Font and Sebastian Reiche (see page 46). Left to right: Javier Muñoz, director of the Alumni Association; Jordi Canals, IESE dean; Jorge Sendagorta, president of the Alumni Association; and María del Mar Raventós, member of the executive committee of the Alumni Association, representing the vice presidents. 62 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

65 ALUMNI ASSOCIATION SCHOLARSHIPS FOR MBA STUDENTS WE RE GRATEFUL FOR THE OPPORTUNITY THAT THIS SCHOLARSHIP GAVE US These were the sentiments of Vanessa Macdougall (MBA 17) on behalf of the 13 Alumni Association scholarship recipients for the classes of 2016 and It has not only provided us with financial support, but it has also given us a sense of pride, she said. And feeling proud, Macdougall said, is not incompatible with modesty. Humility is particularly important because it fosters the ability to learn, she said. The Alumni Association scholarships are awarded to students with outstanding academic performance and professional excellence, and covers 50 percent of tuition for the two years of the program. The president of the Alumni Association, Jorge Sendagorta (PADE 90), said: It s an honor to be able to give these scholarships every year, thanks to the help of the Association s body of members. This year, the number of scholarships awarded to the MBA class of 2017 went from five to eight. IESE ALUMNI ASSOCIATION BY THE NUMBERS ( ) 43,049 IESE ALUMNI AROUND THE WORLD NATIONALITIES REGIONAL ALUMNI CHAPTERS ALUMNI LEARNING PROGRAM 34,436 PARTICIPANTS 243 SESSIONS CAREER ADVICE 483 PARTICIPANTS IN PROFESSIONAL DEVELOPMENT SESSIONS 330 PROFESSIONAL ORIENTATION INTERVIEWS E-CONFERENCES 68 NETWORKING EVENTS 6,852 PARTICIPANTS Download the IESE Alumni Association Annual Report from our website, Google Play or itunes Alumni Magazine IESE APRIL-JUNE 2016 / No

66 L A S T O WR OI R D The Digital Era: What We ve Learned So Far JOSEP VALOR Professor of Information Systems and holder of the Indra Chair of Digital Strategy, IESE A lmost 25 years have passed since the first web browsers unleashed new business paradigms in the early 1990s. We ve gained enough perspective to look back and learn from the winners and the losers. Here are my top ten business takeaways from the last quarter of a century. 1. Good Times for the Long Tail Reduced search costs have led to the long -tail model sell fewer units, more often gathering force. It s easier for clients to find products that satisfy specific needs. This prevents them from buying a generic alternative. It was not traditional big ad spenders who pushed revenues at Google to $54 billion in 2015, but an army of long-tail advertisers. 2. Stand Out From the Competition Online streaming television provider Netflix recently flicked the switch on over 130 countries. Just a few years ago, it was locked in price wars with Amazon and Hulu. How did Netflix get from there to potentially global ubiquity by the end of 2016? By producing high-quality, proprietorial content, differentiating its offering. 3. Instantly Capture Generated Value In the pre-digital music industry, record labels only got paid when records sold. Creating brands and managing musicians brought no revenue. That s why some record labels now manage artists and organize concerts for profit. Value is captured when it s created, rather than waiting for records to sell. 4. Watch Out for Aggressive Neighbors Apple recently launched a music streaming service, Apple Music. Spotify is a music streaming company and shares most of its clients with Apple. Apple Music offers a service at a marginal cost that also allows clients to sync their itunes library, pulling users tighter into its ecosystem. Spotify could get left behind. 5. Cutting Costs Is Not Enough Business models based on reducing transaction costs alone are under threat due to the emergence of new companies. The Lending Club, for example, connects borrowers and lenders online, undercutting costs at traditional banks. But it s the firm s data on debtors solvency that makes its model more secure for lenders. 6. Ensure Your Platform Delivers Value to Your Customers Blackberry, once the pre-eminent smartphone for business, is in freefall. How? While Blackberry focused on producing the best device, Apple and Android created phones with applications loved by their users, adding value to their platform. A platform s worth lies in the accessories, just think of Mattel s Barbie. 7. Use Your Data IBM Watson for Oncology analyzes a patient s medical information against a vast array of cancer case histories, academic research, and more, to provide evidence-based treatment options. Mining big data gets you closer to your customer s needs so you can provide tailored solutions. It can even prompt new business models. 8. Digital Transformation Can Render Your Business Model Useless Kodak used to make money off almost every photo taken in the world. In the time it takes you to read this article, thousands of selfies will be snapped but Kodak won t see a cent of it. Overhaul your business model continually. And you need to think beyond providing the digital version of your product. Your whole asset base might be becoming useless. 9. The Best Technology Doesn t Guarantee Success Webvan was a dotcom that promised to deliver groceries to customers within a two-hour window. It went bust in 2001 as infrastructure investments vastly outstripped sales growth, and management lacked industry know-how. Business models which combine deep market understanding and technological possibilities have the potential to prosper. 1o. Remember: Anyone Could Be Talking About You In 2010, Greenpeace accused Nestlé of sourcing palm oil for its KitKats from unsustainable sources on social media. Nestlé responded by engaging with stakeholders, switching suppliers and monitoring social media sentiment 24 hours a day. Work on a digital communication strategy. And monitor who says what. 64 APRIL-JUNE 2016 / No. 141 Alumni Magazine IESE

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