Financial and economic crisis and crisis of values

1652.jpgDecember 2009 | By Manuel Bermejo, Professor at IE Business School

The explanations offered by economists for the financial crisis only serve to understand how the whole house of cards fell down… but the earthquake that caused the collapse is a crisis of values that affects us all.

In the last quarter and for the first time in 15 years, Spainâ??s GDP has fallen. Numbers are never wrong. Political debates more concerned with words and appearance than the actual situation have come to an end.

We have reached this situation thanks to a chain of different factors. A financial crisis that arises from the appearance on the market of the so-called ´toxic assets´, which generates a loss in confidence, deterioration of bank balances (to the point of bankruptcy in some cases) and a loss in liquidity.

This situation permeates the real economy. Even with business models of proven success, many companies are asphyxiated by the lack of credit they need to balance their cash flows and, in the best of cases, they decide to adapt their costs or even close down, leading to more unemployment and less business activity, which affects suppliers. On the other hand, we have individuals with less purchasing power due to a lack of confidence or the effect of the increase in the price of money or less capacity for generating revenue. A vicious circle. The Spanish economic model, so dependent on construction, which has fallen to the deepest depths, domestic demand and tourism, both affected by the consumer crisis, has inevitably fallen into a recession.


IE International MBA – Forming change agents

IE Business School - Main BuildingThe new International MBA curriculum puts change and change management front and center. Organizations, markets, and societies are changing at an ever-more rapid pace.  To stay ahead, companies will have to constantly reinvent themselves.  For this they need leaders capable of identifying major drivers of change, gauging the potential impact of change, and formulating and implementing adaptive strategies of change. Building on IE Business Schoolâ??s existing strengths in entrepreneurship and innovation, change management, diversity and leadership, the new International MBA program strives to form change agents for the private, public, and non-profit sectors.

The consequence are some major developments in the structure and curriculum of the program which already have been introduced in the November intake, but will continue in the newly introduced Spring intake which will start on April 14, 2009:

LAUNCH.  The program begins with a two-week intensive program on Leadership, Cross-Cultural Awareness, Understanding, Networking, Communication and Humanities that develops participants personal skills and perspectives through hands on workshop and out-of-class learning experiences.  Developing skills in the areas of critical thinking, team work, communication, and creativity are the main objectives.  To achieve this, IE relies on a combination of in-house experts as well as leading external consultants and providers, including trainers from Shakespeareâ??s Globe, the famous theatre in London, who will work with students on communication skills, and the Architectural Association School of Architecture, who will lead a workshop on design.  The module will also develop skills in career planning and -management, as well as the art of networking.

HUMANITIES.  Management is about people.  Bringing the humanities into the MBA curriculum helps to ground the study of management and puts it in perspective.  During the LAUNCH module, participants will study the grand civilizations to better appreciate differences between regions of the world and explore pertinent issues of contemporary society.  Topics include the History of Modern Spain, the Arab World, Indian and Chinese civilizations, New Technologies, Contemporary Culture, and the Challenge of Global Warming.

MAKING CHANGE HAPPEN. Between the first and second core periods, participants in the program will be led through a multidisciplinary discussion of a case of radical industry change by a team of IEâ??s leading professors.  Each session takes a different approach â?? strategic, organizational, financial, cultural, personal â?? and slowly a full picture of the complexity of change management and change leadership emerges.

CHANGE IN ACTION.  Between the second and third core periods, participants explore â?? through a series of presentations from outside experts and case discussion facilitated by IE faculty â?? the challenges and opportunities of discontinuous change.  Topics will vary each year.  Examples include climate change, demographic change, nanotechnology, or the rise of user-generated media.  Exercises will strengthen participantsâ?? ability to gauge the impact of change and to identify new opportunities offered by change.  The topic for 2008-09 is energy, with a simultaneous focus on affordability, sustainability, and security.


Driving on dipped headlines

1656.jpgDecember 2009 | By Rafael Puyol, Professor at IE Business School and president of IE University

Immigration and an ageing population are both issues that need to placed under the spotlight, but switching on that light is proving difficult in the current economic situation.

In times of crisis people find it difficult to drive on full beam, to analyse things calmly and in perspective, with the attention to detail required for important matters. Take the two things that will have the greatest impact on our future: ageing and immigration, currently being tackled using dipped headlights, providing a view of only short-term effects rather than mid and long term results.

The short-term considers the matter of immigration as if it involved only two opposite standpoints, namely whether it should be permitted or not. And, as things are not going well for anyone, the balance of the dilemma leans towards those who are against, those who uphold the need for strict controls and the return of foreigners to their countries of origin. However, the approach to immigration cannot be based exclusively on the present situation. It is important to look at the future evolution of population and the labour market to realise that more immigrants will be necessary in the future. Hence, the question is not whether or not we should have immigration, but rather, since it is very necessary, in knowing how many immigrants we are going to need and what type.