Posted by: Jena McGregor on October 15, 2008
My colleague Cathy Arnst offers up a guest post from Cambridge, Mass., where she sat in on the Harvard Business School’s Global Business Summit:
What timing! Harvard Business School threw itself a big three-day conference this week to celebrate its 100th birthday, and HBS Dean Jay Light admitted that the school was anticipating a much more celebratory mood when the planning started two years ago. About 1600 alumni, professors and current students attended the Global Business Summit Oct 12-14, and the mood was subdued if not downright grim. There were lots of mea culpas thrown around by the many corporate leaders that spoke. Interesting, though, that the name of the school’s most prominent graduate was rarely mentioned. George W. Bush, MBA HBS ‘75, appeared to be he who would not be named.
Dean Light set the tone with his opening address, in which he said the current financial crisis represents a collective failure of financiers, business leaders and politicians. General Motors Chairman Rick Wagoner said corporate leaders must stop pressuring government to enact policies that only help their own company or industry, rather than the nation as a whole. “A little more statesmanship on the part of business leaders is crucial.”
JP Morgan Chase CEO Jamie Dimon was particularly outspoken in his criticism of the denizens of both the corporate and political worlds over the last several years. The mortgage business “was basically under-regulated,” he said, leading to convoluted financial instruments. “What were we thinking?” he asked rhetorically. “We need good rational regulations.” He also agreed with much of the public on the issue of executive compensation. “There were a lot of legitimate complaints. There were a lot of people who in hindsight wound up making a lot of money who didn’t deserve it.”
Dimon didn’t have a high opinion of politicians either, charging that they regularly ducked their responsibility to tell the voters some hard truths about the economy. “We are unable to make the decisions to make this country healthy.” Instead, politicians routinely oversimplify and cast aside issues and facts, he said. “I think the companies are more charitable than the average congressman, and probably more trustworthy.”
Dimon, and almost every other speaker, was particularly critical of the nation’s lack of a comprehensive energy policy that would reduce the need for foreign oil. Dimon said, somewhat angrily, “if we are unable to make the decisions to make this country heavily reduce energy dependency, than we deserve 4 dollar per gallon gas.” He called for a tax on BTUs. General Electric CEO Jeffrey Immelt wants the federal government to vastly increase its investment in green technologies, a very low priority of the Bush administration. He followed up with this blunt statement: “I’ve been a Republican all my life. I believe in free markets. But the notion that the government isn’t a catalyst for change in this country is purely garbage.”
The crowd responded with sustained applause, as they did for most of the contentious remarks at the conference. It seemed as though the meeting was taking place at Harvard’s far more liberal Kennedy School of Government across the river rather than the business school. At lunch, plenty of attendees said privately that Dimon should be the next treasury secretary.
Meanwhile, no one tried to pretend the future looked bright. Microsoft founder Bill Gates projected a “fairly significant recession” with peak unemployment reaching 9%. “Consumer sentiment has never been so low,” he warned. Immelt thinks the U.S. is likely to experience two quarters of negative growth once the global financial systems stabilize. And he doesn’t know when that will be.
Foreign business leaders were just as dismayed. Anand Mahindra, vice chairman of the giant Indian conglomerate Mahindra and Mahindra, said there is a “crisis of confidence” around the world because no one had ever expected to see the U.S. in this situation. “It’s frightening for us to hear about the U.S. nationalizing banks. That’s what Indira Gandhi did in 1966.” On the other hand, Mahindra felt the crisis gives companies in other nations the opportunity to step up to leadership positions, replacing troubled U.S. entities. “People are sitting around the world now saying ‘I could be the next Goldman Sachs. You know, I could be.’ “
Incidentally, there is some irony that HBS is celebrating its 100th anniversary now. The school was created after the banking crisis of 1907 and the following depression to address concerns that American businessmen did not have the skills to manage the rapidly growing economy.
Videos of all the speeches and panel discussions given at the global summit are available at the web site.
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