Forget about short cuts and soft measures: Europe’s problem is that it has lost the market’s confidence, and in order to get it back it will have to take some hard measures.It’s a well worn phrase which is why I have permitted myself a certain amount of poetic license, because it seems to go perfectly with the confusion that is rife among markets and analysts following recent events. The feeling of insecurity is such that we are desperately seeking a lifeline to cling to. Someone is always up for the job of throwing said lifeline and public opinion seems to have honed in on two specific groups: governments comprised of technocrats and the European Central Bank (ECB). The former are expected to bring the required level of sanity and the ECB is supposed to start buying up debt with no thought for expenses. But once again it’s the wrong diagnosis.

The European Commission, according to its vice president Olli Rehn, has decided that the key lies in restoring confidence in fiscal sustainability and the financial system, and in speeding up reforms that stimulate growth potential. Hence we have to change our tune or we have to take notice of the Commission, but either way we should not be looking for short cuts.

The European problem is a simple one. Investors have lost confidence in the Euro, not just in Italy. Let’s not confuse the symptoms of this particular illness. They have done it for a series of institutional reasons – the well-known design faults of the Monetary Union – and mistakes made in the way the crisis has been managed. In my opinion they include two particularly big mistakes. The first was to declare that European sovereign debt is restructurable – albeit only Greek debt, but who on earth believes that at this stage – without having the necessary financial resources or legal instruments to effect an immediate exchange, and the second was to punish banks for their sovereign debt holdings without having the necessary resources to fill the hole created. Both decisions have had consequences that were impossible to recover from in the short-term: they have made sovereign debt a credit asset, a financial instrument that competes with emerging debt, and have eroded the credibility of the European banking system, which has been forced to divest its sovereign debt. The response of investors has been to see the sustainability of European debt as being much the same as that of emerging economies, demanding fiscal tightening, devaluation and structural reforms. With the added detail that one of the policies of this trilogy was unthinkable until the Greek referendum made it possible. It’s not that they have taken a dislike to us but rather that they are giving us a dose of our own medicine. Looking to the ECB as the savior in these circumstances is a naïve thing to do.

Does anybody seriously believe that it was the liquidity of the Bank of Brazil that saved its country from default during the Argentinian crisis and Lula’s arrival? Until the exchange crises crossed the Atlantic, we economists had always thought that the secret lay in a rigorous fiscal and monetary policy ratified by the incoming president while removing internal barriers to growth and opening the economy to the world, changing the attitude of Brazilian society and overcoming decades of protectionism and an ideology of self-sufficiency. Reading the reports by the European Commission like the one we have seen this week inspires a certain optimism that Europe has understood the message at last, but then you only have to take a look at the statements made by the Eurogroup and the minutes of the summits to abandon all hope again.

The direction to take is clear, but painful. The countries that have had investors withdraw have to regain their confidence. This will not be achieved by massive interventions by the ECB in the secondary debt market, or in the primary for that matter, even if we did change its statutes to allow it. Regaining confidence means having to change the dynamics of sovereign debt and preventing it from growing exponentially. This could be achieved by sharing the risk of non-payment, leeching off the credibility of the German treasury through the famous eurobonds, but this would be a blatant breach of the terms of the treaty and it is not going to happen now, unless we also want to destroy the security of the European legal system.

The alternative is to hope that this is just a passing bout of speculation and that interest rates will go back to normal with the new, more competent (at least technically speaking) governments, more skilled in the mysterious arts of finance. But that isn’t going to happen either, at least not on a big enough scale, because investors will still be reluctant and skeptical, and funding needs are not going to disappear just because Papandreu, Berlusconi and Zapatero have retired. There is no alternative but to work on reducing the volume of finance needed, i.e., fixing the public account and external accounts, and increasing growth potential.

Europe has insisted on behaving like an emerging economy. It cannot now act surprised because the markets have noticed and are treating it as it really were. It was probably inevitable, a consequence of globalization. Without the Greek crisis it would probably have happened a few years later and it will not be long before the same happens to the US. But it is also true that it has an additional exposed flank, something that it still has to address. It is the duty of the European authorities to complete the monetary union project to achieve optimum positioning. This will require advancing on four fronts: labor mobility, trade integration, flexible prices and salaries and a common stabilization fund. Meanwhile, there is a fifth front which is also the most difficult to address, namely a European governance that has hitherto proved itself incompatible with the demands of the real world. But the solution to this crisis is not going to come from Europe, unless periphery countries accept life in a protectorate regime. The only way to avoid this would be for the government to take decisive action to tackle the reforms needed to regain its credibility.

Investment banking has once again shown us the way to address the world’s enormous and recurring debt problem. It is, of course, by cheating.Although it may not have been noticed, investment banking has shown us the way solve the world’s enormous and recurring debt problem. What did the last entry in Lehman Brothers profit and loss statement show? Enormous profit. Let’s see why. The results of the third quarter of 2011 for Lehman Brothers produced “profits” as a consequence of the fall in value of the debt market of the banks themselves. In other words, if the risk of bankruptcy of, for instance, Morgan Stanley, increases, the price of its bonds falls, which means its “profits” will rise. Intuitive? That’s why the last entry in Lehman’s books was actually an enormous profit. The five main investment banks have posted “profits” totaling 15,000 million dollars obtained this way in the third quarter, which means that the position of the bank’s “own” funds is skewed by an equivalent amount, as is its solvency, measured in relative terms (value at risk) or absolute terms (leverage). In short, over 80% of the profits posted by investment banks in the third quarter of 2011 is a result of this fantasy.

Thus the profits of 6,200 million dollars posted by Bank of America contain a bonus dividend of 3,600 and a “profit” due to a fall of 1,700 million dollars in the amount of debt. Citigroup’s profits have risen by 74% to 3,800 million dollars thanks to the recognition of a “profit” derived from the drop of 1,900 million in its debt level. Morgan Stanley posted a profit of 2,150 million dollars, of which 3,400 were the result of a fall in the value of its debt, and JP Morgan posted a profit of 1,900 million dollars using the same system, beating the market with a profit of 1.02 dollars instead of the expected 91 cents (its shares fell by 4.8% – the market is not quite as simple as it looks). Unfortunately, this practice is also being employed in Europe, where UBS has posted a profit of 1,800 million Francs as a result of the fall in value of its debts. Its total profit was 1,000 million Francs, which means that if it hadn’t used the trick it would have posted losses, not profits, as a result of its trading scandal (2,300 million dollar loss).

The “logic” of posting a profit when the risk of bankruptcy rises lowering the value of liabilities is that the bank will then have the capacity to repurchase that debt, i.e., it is assumed that it will be capable of finding the cash required to repurchase said debt and to amortize it, which is a highly questionable hypothesis. This way of treating debt was obtained from the banking lobby (despite honorable opposition from Goldman Sachs, which nevertheless didn’t think twice about benefitting from the system when it came to posting results) when the regulator applied the mark to market system to its assets. The banking system said: if the accounting system forces us to apply market value to assets, we should also be able to apply it to liabilities. And that’s how the prudence principle was breached.

As the Financial Times pointed out on October 24, if you are a Visa customer and you realize that there is a considerable risk that you will not be paying what you have spent on your card, all you have to do is amortize the part of the loan that you will not be paying by posting it as a “profit” on your household accounts.
Governing authorities, entrepreneurs and citizens should learn from such a clever accounting system. Greece would gain instant solvency, given that its bonds are being sold at 40% of their face value. It could post an enormous revenue by multiplying 60% by the notional value of its debt, and that would mean that would be no deficit but rather an gigantic “profit”, much to the relief of the German taxpayer. Berlusconi would be saved, given that Italy could achieve a similar effect by posting a profit equal to the current 8% discount on their bonds (the third largest sovereign bond market in the world), or Spain with 3%.

The deficits would be eliminated with the stroke of a pen and there would be no need for painful social cutbacks. Nor would it be necessary to intervene in the CAM savings bank or the Caja Castilla la Mancha savings bank. In fact, the savings banks would be more profitable (and therefore more solvent) than the banks. Nueva Rumasa would also have avoided being put out to tender, and the more problems Banco Santander pointed out when restructuring its debt, the more “profits” it could have chalked up, thereby instantly improving its balance sheet. Real estate developers would all be saved, and subprime mortgages would post the greatest profits ever achieved in the history of economy.
I don’t want to delve too deeply into the realms of absurdity, but it is disgraceful that this is a reality. I am going to quote three universal truths to illustrate the moral of this story:

a) With reference to their bank balances Anglo Saxon accountants say “on the left side there is nothing right, on the right side there is nothing left”.

b) An investor will say about a firms accounts that “profits are a matter of opinion, the cash flow is a fact”.

c) In finance classes we say: “TCFIMITYM”.

TCFIMITYM stands for “The Cash Flow Is More Important Than Your Mother”.

Jobs has left us a legacy that goes way beyond technology. He has left us with an approach to life and business management based on innovation, commitment and a capacity for work.The way in which Steve Jobs’ legacy has impacted products and industries is seriously impressive. The first personal computers, the organization of windows and desktop on the computer screen, new life breathed into animation films, the revolution of the music industry with a market that everyone said could not exist, a revolution in the mobile phone industry that practically destroyed the previous leader… And more recently the reinvention of computers with the iPad, generating thousands of millions in sales, creating and destroying entire industries, while multiplying the value of the firm by a couple of thousand. And yet I believe that his greatest legacy is the way we now see business organizations, innovation, and the kind of commitment and capacity this involves.

In times when it seems that imitating, repeating, and spending your life doing as little as possible are in fashion, Jobs is the most salient example of what it means to dare, to fight, to do things better than expected. He wasn’t a technology genius. He didn’t need to be. His strength lay in understanding trends, or creating them. His products were always enormous commitments with an element of risk. But they were also born of passion, entering sectors to which he brought the values that his vision of Apple stood for: a focus on the user and ease of use, the design, the total integration between hardware and software that brings life to a device, not stopping at good, going for excellent. He entered industries where there had always been a disconnection between client and technology. In the music industry nobody had been capable of giving the customer a simple and solid means of managing his/her music. His mobile phones combined design and functionality by thinking about a new form of interaction. And then he extended this notion to tablets, placing his famous application shop above everything else, which meant that thousands of small and large firms worldwide are supplying applications (value for the Apple client), and bringing revenues to the firm. Pure genius. The impact of these changes transcends the world of computers or technology. It affects the way we interact, the way our firms are organized, how we relate to brands and information. His products have created and defined some of the key trends of the new macro-industry that feeds digital convergence.

Passionate. Perfectionist. Groundbreaking. Daring. An implementer. A man of vision. The most recognizable face of the digital revolution was all these things according to the people who knew him best. It is an example of what innovation can achieve when accompanied by effort and dedication, and by risk and a lack of respect for established norms. He also taught us the importance of style and design in business, of respect for clients and how to create and keep fans loyal to a brand and a way of doing things. Finally, he gave us a demonstration of how all these ingredients can forge legends. Thanks, Steve, for bringing us fantastic products and model to follow. Each time we remember you we will be a bit braver, and we will dare to take the next step, a bit further, a bit more difficult.

It is difficult to write about Steve Jobs without further talking up the things we have seen in all the obituaries. Superlatives abound: genius, visionary, inspirational leader, guru… many have used those words to write pieces that range from epic to poetic, a chorus of eulogies, which, although fairly typical when talking of someone who has just died and we accept that it is not a time for criticism, have been taken much further in this particular case.

What did Jobs have that made him give off such an incredibly positive vibe, and the feeling that he was almost superhuman? Firstly, his story made for good reading: a successful entrepreneur, who was pushed out of his own company, saw it practically collapse, only to be brought back to triumphantly turn it into the most valuable firm in its field. But there is more to the “magic” than that. The praise heaped on Jobs is really the result of projecting what we make of his personality and creations onto ourselves.

Steve Jobs was, in actual fact, the great reinventor. His creations were not inventions in themselves, but rather reinventions of existing products. The common denominator was that they were reinterpretations of ideas focused on one key aspect, namely the user. That’s you and me. Everyone. When Jobs launched his computer onto the market, he did it with the idea of reinventing a complex device that was not user friendly in the slightest. The idea was that any user should be able to use it without problems, or even enjoy using it, feeling personally empowered by a tool which, like the advertisement says, just works.

The user experience was, without doubt, the core value of his creations. It was an obsession, which translated into a relentless pursuit of perfection bordering on hysteria. Control over each and every aspect of the process, from hardware and software to the packaging, and an obsession for the interface, the point of contact with the user.

His idea worked. And he repeated it several times with tremendous success. The iPod is an MP3 player which was launched when there were already thousands on the market, but the moment it came out it redefined the whole concept and immediately rendered all other MP3 players obsolete, because they were just more difficult to use and smacked of previous generation, and when they tried to catch up they just became clumsy imitations. The iPhone? In a market flooded with mobile phones, it was what every other phone wanted to be when it grew up. It forced all other companies to work on the “iPhone killer” product that never came, and despite being practically the last to arrive in the segment it defined evolutionary trends and the technology agenda. Clean, simple, powerful… and no need for instructions. The iPad, same philosophy: reinvention of an old concept, the tablet, turning it into the sexiest and most desirable gadget on the technology scene. Again, no instruction manual necessary.

Launching a sophisticated device, and doing it in such a way that it is a joy to use, as well as having barriers to entry that are so low that you don’t even need paltry instruction manual, is beyond the capacities of the vast majority of mortals. Jobs, definitely managed to achieve just that. We adore Jobs because he dedicated his life to reinventing concepts and bringing them within reach of our capacities, and this brought him a user base who were faithful, loyal Apple fanboys (and girls). People who have used an Apple device find it impossible to resist using other apple products to see if the experience is the same or better. Once you have tasted the apple, there is no going back.

He employed the same approach to customer service. If something broke, you don’t just get it repaired. You take it to a kind of bar were these “geniuses” treat you like a king and solve anything it is possible to solve. All that is missing is a gin and tonic (with apple, of course). So where did this idea come from? From Steve’s penchant for putting himself in the users’ place and trying to give us the same experience that he himself would like to have. That’s what he wanted for all his products.

When all is said and done, we adore Jobs because in addition to being brilliant, he knew how to channel his brilliance toward others. Toward his customers. He enlightened us. He was a compulsive user of his own products to see how others felt when they used them. He invented practically nothing, but he reinvented better than anyone else. And he never stopped being obsessed with the user experience. He always had his customer in mind. Perhaps, as I read on Twitter yesterday, Steve Jobs is not dead – he just went to see his iCloud from close up.

The IMF’s absurd proposal to buy debt from threatened European countries like Spain or Italy would have made it into a hedge fund, and it would have been developing countries that paid the price.Ever since the Mexico peso crisis resulted in the so called tequila effect in the early nineties, the International Monetary Fund has been trying to find the formula to prevent financial contagion. To be more specific, it has been searching for the way to stop financial market dynamics from unfairly impacting countries that have no serious solvency problems, but which will end up having them if they fall out of favor with investors, who then pull out en masse causing spiraling debt differentials coupled with a credit crunch. But what it has not done so far is to suggest that it should serve as a highly speculative investment fund that would intervene directly in the debt market, stockpiling the currencies of countries under threat. This is exactly what Portugal’s Antonio Borges, the inexperienced head of the European Department, proposed. The suggestion was only on the table for the space of a few hours, because it was such a ridiculous idea, so out of synch with the nature and functions of the IMF, that he had to withdraw it before the end of the day.

The IMF has two tools that could be used to achieve such an objective, namely the precautionary credit line and the flexible credit line. The first of these, if I am not mistaken, has never been used, and the second has been granted to Poland, Colombia and Mexico, but none of these countries have ever had to, or indeed wanted to, draw on it. The advantage of this system is that it can provide a country with immediate access to IMF aid without having a program in place, and without having to temporarily give up economic sovereignty, and pay the inevitable political price. Countries who request this procedure must have a good economic base, a sustainable position in terms of balance of payments and public debt, and a financial system with no systemic problems. They also have to pass a pre-qualification process, and that is more problematic because the mere fact they ask for it is a sign of problems to come. Why would a country submit to such examination and international scrutiny unless it was afraid of entering into crisis? These financial tools were designed to help with the difficult and often volatile transition from emerging country to developed country, but nobody imagined that it might be needed for a European country, much less Spain or Italy. And therein lies the problem for which our good man Borges wanted to find a genial solution.

The desperate proposal serves to show the level of concern about the possible impact of the European crisis, on world economic stability, and the growing doubts that the Europeans are capable of finding a timely solution on their own. There is also a whiff of opportunism, as the IMF sees its chance to place itself at the epicenter of the world system, because in essence, the IMF actually volunteered to do what current statutes and the Maastricht Treaty prevented the European Central Bank from doing. But rush jobs and short cuts are not a good idea.

The rejected proposal would have supposed a deep change in the nature of the International Monetary Fund, converting it not only into a central world bank, capable of creating liquidity, but also rendering it as leveraged as the investment banks it criticized so fiercely in the post Lehman era. After all, it would be reasonable to assume that countries would not be willing to extend their contributions to their reserves assigned to the IMF, given that it would mean giving more the IMF than they already refuse to give the ECB. Hence the IMF will have to resort to the private capital market to finance the plan, and that would jeopardize its AAA rating and raise the cost of its traditional balance of payment adjustment programs. In short, emerging and developing countries would end up paying part of the European bail out – a growing and limitless part, because I fail to see member countries extending an indefinite guarantee to the IMF to cover it for all potential losses derived from their performance in the debt market.

Moreover it would need to make changes in its operative systems, because the dynamics of its intervention in the debt market would inevitably mean transferring decisionmaking powers from its Directorate, as it likes to call the Board where governments sit as shareholders, to its staff, namely the civil servants who would be responsible for carrying out specific operations with an extremely high level of discretionality and scant knowledge and experience, given that it is not their field of specialization.

Borges’ blunder, or rather the IMF’s, because knowing how it works it is difficult to believe that he came up with it all on his own, was no accident. Although I wouldn’t go as far as to state that it was part of a strategic plan, set to be revealed in installments, aimed at creating a new international economic governing body with a central world bank. I am more inclined to think that it forms part of investors’ general weariness of Europe. Get on with recapitalizing your banks, decide what you are going to do with Greece and its inevitable bankruptcy, create a European finance ministry and a single bank supervisor. Or dissolve the whole thing and just leave us alone.

Words are human, substantially human. They link our thoughts to reality and to other thoughts. Thanks to words, others know what we are thinking or what we want to say. Depending on how skilful we are with words, we succeed or fail in reaching others, obtaining personal or collective benefits, and building the future.

No matter how knowledgeable they are, no matter how intelligent they are, people who do not express themselves very well are at a disadvantage. Words are effectiveness.

Our thoughts are made up of words. As we progress in the art of the word, we learn to think better, we acquire mental skills that we did not have previously because the brain develops with language, and if we train and teach the word, the brain increases its muscle power.

Our brain deals with images, sensations, all kinds of memories and an endless array of words. Our language brings all that together. The word and the action are what best reveal what we are and what we want to be. People who do not use words well act as if they have had their strongest member amputated.Everything is very closely connected, of course, but speaking is not writing, reading is not writing, reading is not speaking. Good readers will express themselves better than people who don’t read because, among other things, they have more to give, they have much more fruit on their interior tree. However, if readers do not practice their writing, they will never know how to write. There are people who speak very well but write very poorly because the road to becoming a great writer is the road of discipline. When I write, I often think of the professional athlete who trains tirelessly to give his best in the match. Speaking, writing, reading and even listening are so related to this subject, and require both training and discipline.

The course I teach on words as part of the IE IMBA -The value of the word- is based mainly on becoming aware of one fact: the transcendence of words. If we know that words are essential in our lives, that using words as fluently as possible will help us and open doors, then that knowledge is the best place to begin: to cultivate them, work on them and progress in their art as far as possible.

How can that be achieved? It is easy to explain but it takes a long time, although I am sure that the first steps are the most enjoyable and that when one knows only a little about the subject, it is easier to progress in it.

One needs to train one’s interior if one’s exterior is to shine. This includes academic training, but also and more importantly here, humanistic training. You have to read a lot and read a wide variety of genres; you have to be interested in art, in ideas, in the people who have known how to think and express themselves well throughout history. You have to be as educated as possible. Cicero said all orators had the duty to know their philosophy. Today, I think that means having knowledge about humanities and being welleducated.

The concept of word includes every modality, every modern modality, and on my course I focus on e-mail, on the telephone, on conversations, on everyday and not-so-everyday media, how to write an article or plan a book. The novelty of my course is that it is global: I teach my students to speak better, to write better, to listen better and to do so in the most common contexts of today’s world.

On that basis, the aim is to practice in class and at home. Reading good books, good magazines. Travelling, enriching ourselves by looking for interesting people who have something to offer. Speaking in public whenever we can and taking part in any conversation, wanting to do it well, not being afraid and moving forward one step at a time on a daily basis. Fear is lost by overcoming it, in other words, daring to gradually do what we never dared to do simply because we were afraid. Taking one step forward.

When we get used to defending our ideas, giving our opinion, learning to accept our mistakes -because we all make them- we go beyond ourselves. History has shown the value and power of the word. The word has conquered peoples and countries, the word helped human beings to earn the admiration of the world. With the word, human beings have laid out all the values and talents they have; we only want a better tool for communicating, so that the treasure inside, everything we can give, shines even stronger. For anyone who knows how to look after it and use it, the word reaps rewards on a social, professional and personal level. It is generous to those who use it out of respect, in a spirit of self-betterment and humanity. The word can be a brilliant, spirited steed.

By Eduardo Martínez-Rico, Professor at IE Business School, first published at IDEAS, the IE Alumni Magazine.

If you wish to use WORDS to make an impact, explore our Master degrees from the IE School of Communication:
- Master in Corporte Communication
- Master in Journalism

The triumph of Spain in the World Cup can give us some excellent lessons in management, with its focus on talent, team work and a commitment to society.For the first time this year, Spain united its many talented players to win the FIFA World Cup soccer championship. Hundreds of thousands of fans lined Madrid´s streets to celebrate and welcome their heroes home after the team beat the Netherlands 1-0 on a summer Sunday in extra time. Those throngs were cheering after months of political unrest, economic gloom, a debt crisis, 20% unemployment and fighting among nationalist regions for greater autonomy from the central government. 

Spain´s team always had great talent, but bringing it all together had been elusive. What lessons can Spain and the world take away from the World Cup victory? Ultimately, the alignment of institutional, team and individual goals was what brought success. With a mission to play creatively in the World Cup–to pass, to move, to think, to act rather than react–Spain found a winning approach. What can this leadership example of excellence through ultimate teamwork teach us about collaborating for economic gain as the world economy regains momentum?

The heart of the Spanish team lives in a small but famed youth academy in Barcelona called La Masia. There, nine of Spain´s players spent years nurturing individual styles founded on exceptional technique. We should learn from their long-term commitment. The school, started in 1979, has developed athletes who learn supreme artistry that exhausts and demoralizes opponents as they control the ball. Consider, as you ponder leadership and dedication, that Andrés Iniesta, who scored the extra-time winner for Spain in the World Cup final against the Netherlands, joined the academy as a 12-year-old from his Albacete junior club. Do corporations in today´s marketspace devotedly grow their best talent from within? Or is there the false illusion that the grass is greener on the other side of the fence? Do we make a commitment to our people as our best resource?

The best-led institution in sports is Barcelona’s city team, FC Barcelona. The FC Barcelona slogan is “Mes que un club!”–More than a club. The team competes on the field of play, of course, but it also vibrates, every day, to the rhythm of its people´s concerns. It supports their sense of caring and humanitarianism. “Behind our shield, there is a heart beating,” Joan Gamper, FC Barcelona’s founder, has said The club contributes 0.7% of its income to the FC Barcelona Foundation, setting up international cooperation programs for development. It supports the U.N.´s Millennium Development Goals and has made a commitment to Unicef´s humanitarian aid programs with the donation of one and a half million euros. It even pays to wear the Unicef logo on its shirts, where other teams get paid for everything on their uniforms. What a pleasure to know that winning the World Cup, arguably the most prized trophy in sports, can be done with commitment, integrity and a “beating heart.”

In Spain during the dictatorship of Gen. Francisco Franco (1939-1975), Catalans, Basques and others were forbidden to speak or publish books in their non-Spanish languages. The World Cup win has led to the rare sight of people in Barcelona waving the Spanish flag alongside Catalonia´s own red and yellow one. Enthusiasm welled up in unlikely places as Spanish players from Catalonia (Xavi Hernandez, Carles Puyol and Gerard Pique) and the Basque region (Xabi Alonso) all played and won together. How can Spain capitalize on this tenuous patriotism and seize the moment to unite more fully under its single flag? Who will lead a country depressed by nationalist factionalism?

Head coach Vicente Del Bosque led his team to the lowest-scoring World Cup championship in history, with just eight goals. The team was content to defend first and seize infrequent opportunities to score. It structured a seamless relationship between defense and attack, with defenders and strikers equally capable of handling the ball and moving the ball around the field. The low scoring added tension, but Spain was usually in such complete control of the match that that scoring never represented how the team dominated its opponents.

IE Focus

It’s time to put an end to deliberations. If there is anything that really is changing as a direct result of the popularisation of the net and the so-called social web, it is undoubtedly relations between businesses and their customers.

Open your account on Twitter (Sorry? You’re an executive and you still don´t have Twitter or you don´t know what it is?) And write something about well-known large business organizations with millions of customers, such as Telefonica or Iberia, often criticised for their customer service. In a matter of minutes, if what you have said about the company merits a reply, you will quite possibly find it on Twitter. Have a look at the Twitter accounts of Movistar or Iberia… What can you see? Businesses talking directly with their customers and offering to solve their problems. Businesses that listen to the small fry.

It might be a question about items on a bill, explanations about an incident or about an offer: the question is that, after many years of inflexible single-direction trading and contacting customers only to harass them by throwing new products and services in their faces, many businesses are finally starting to use bidirectional communication channels to maintain real relations with their customers. Such relations are much more genuine and make it worthwhile to manage exceptions or speak with a human voice if a problem can be solved and a customer can be satisfied. Trivial? At the moment, more or less testimonial. But undoubtedly a sign of the times. Times in which technology, far from isolating individuals, makes it possible to humanize relations and bring together those who are on both sides of the screen. How can invest millions in expensive CRM systems if our customers then speak about us in public and we pay them no attention?Have you ever stopped to think how your business communicates with its customers? Why and how does it usually address them? Review your most recent communications: corporate report, press releases, commercial messages… Put them in chronological order and try to imagine one of your friends talking to you with the same attitude, the same tone and the same type of message. Would you think that his attitude was in any way tolerable? Or would you simply think that he was a megalomaniac, self-interested, hypocritical or someone who did not deserve the right to communicate with you directly? Indeed, how often do your attempts at communicating with your customers through advertising campaigns or telemarketing campaigns receive silence as a response? Or even worse, anger? Do you think it reasonable for many of your customers to reply with “leave me alone!” When you try to contact them? Think about it: as the wonderful Hugh Macleod once said, “if we spoke to people in the same way advertising speaks to people, they would punch us in the face”.

Do not hide behind the lack of scale or ignorance. If businesses with millions of customers can allocate resources to speak with them, an SME needs very little to do the same. Instead of wasting so much effort on “pursuing”, try to respond, think about having “someone at the other end of the line”. Someone who pays attention to what people say about their company, who thinks that a complaint can often be an opportunity for improvement. Someone who has felt good at some time when another person from another company did what the North Americans refer to as “walking the extra mile”, doing more than what is strictly necessary to solve a problem. It requires work and learning, but it can be done. It is an attitude. Try it: you will get closer to your customers, become aware of their problems and get ideas to solve them. You will also have more satisfied customers. Your customers are not stupid or undesirable and they do not complain for the sake of it. Listen to them. Technology lets you do so. That´s what real CRM is.

Customers are like cats. After years of throwing stones at them, whenever they come across a man, they usually run away. It will take us years to change our attitude towards businesses that have harassed and pursued us for many years. But for your own good and that of your company, try to understand the change: listen to the small fry.

Television is dead. And not only television, but all the other classic media based on unidirectional communication, because the young are changing the rules. A recent study on teenagers´ habits carried out in the United States reveals of how the way information is consumed in our society has changed over the years: the classic one-way media, such as television, have died a death. The medium that was considered for many years as a bastion of North American culture and which still brings together multimillion audiences for events such as the Super Bowl final is being abandoned by young people in their droves. Time spent in front of the TV has fallen drastically and those who still watch it do so on a different screen: their computer.

The final nail in TV’s coffin has been hammered home, as expected, by the social network. The use of the social network confirms that the absurd fears of some adults for the alleged “isolation” of young people in front of the screen (“they don´t go out any more”, “I prefer my computer to seeing my friends”, “they are so pale because they get no sunshine and only get radiation from the screen”) were unfounded fears: the young people who are the most active on the net are also the most active off the net… they have more friends, go out more and go to more parties. Almost all teenagers (97%) spend more than two hours a day on their social network. They update their status at least once a day and send more than three thousand text messages a month (in the United States, most telephone contracts automatically include a very high number of text messages). And they are exceptionally good at multitasking: when they sit in front of the TV, they do so with their laptop on their laps or their mobiles in their hands. 

We should think about what this means for the immediate future of our society: young people are moving away from one-way media and prefer a means of communication that is almost liquid and constant, which is leading us to a completely different social model. For most of the history of humanity, human beings have received information via one-way media that could not accept a return channel for technical reasons. This limitation has conditioned many of the things we know: businesses bombarded us with advertisements that did not expect a reply beyond a binary variable: one or zero, either they purchase my product or they don´t. Politicians bombarded us with messages or held meetings with speeches that were systematically given in one direction, with no questions or participation and ended by conditioning structures based on more of the same, on a one-way approach and on zero participation: the winner was the “discreet” one, the one who didn´t shout, the one who was simply there long enough, like when you watch a programme from your sofa. 

Young people´s habits today clearly condition the society of the future. And as far as the society of the future is concerned, if there is something I am not very sure about, it is the capacity of many of those who currently take decisions in many areas to adapt to it. To a certain extent, the Coca-Cola advertisement that shows a teenager saying that he is the company´s new vice-president and that “things are going to change a lot” makes me smile: only a few, very few companies really understand the change that is about to happen and only a few have the skill and flexibility to ask who they have to ask: young people who have very different preferences in terms of communication and the information they want in comparison with those of today´s executives when they were young. 

We are living in the screen-change era. From TV to the desktop computer, to the laptop, to the tablet PC, to the mobile… there are many of them, and all very varied and interactive. Insisting on “being part of them just to be there” will not take us anywhere. We do not need to consider where or “on what channels”, but rather in what way we are there, what we propose, how we join that mad multi-person conversation that represents total bi-directionality. Let’s face it: the technologically limited screen with its controlled messages, its interruptions and no response channel is never coming back.