German companies, by the way, are doing very well in this global world. They are developing as job leaders in different parts of the world in China and Brazil. One of the things you see in German companies, both large and small, is that they have a real concern about what impact the company will have in the local community. Siemens may have a manufacturing plant in Stuttgart, When you have a problem, the workers along with management thinks about what the company should do. People might say they would work only 25 hours a week for a month to see how it works (to avoid a layoff). Or they may agree to a 10% cut in their salary.
I don’t want to generalize and say that the German model is for everybody. But you have here a better model. Capitalism is a combination of free enterprise, entrepreneurship and free markets. Until the 1960s, somehow we all agreed in Europe and the U.S. that capitalism was at the service of the wider society.
As opposed to the shareholder, you mean?
Shareholders are important but one way or another companies are given a license to operate in society–to sell goods and services and to create shareholder value. So you cannot just operate. The argument goes beyond U.S. politics. It’s about Aristotle. Aristotle is the father of political science and the science of government. In many ways, Democratic societies in the west owe many things that are basic tenets of our Democracies to Aristotle and his formulations. He says the long-term goal of governments is the well being and happiness of its citizens. The Declaration of Independence and the U.S. constitution contains this thought.
We need to have economic activity that is subject to the broader interests of society. This is part of collective life. What we have seen in the past 30 years is a drifting away of companies and financial institutions from mainstream society. We need to bring it back.
Given your passion on this subject, I now wonder what your PhD thesis was about.
It was rather technical (laughing). It was on the side of quants, not poets. It was on optimal pricing.
Don’t you find it ironic that you feel so strongly about the corporation’s role in society yet when you got your PhD it was all about making sure companies priced products to maximize profits?
But I also studied economics and philosophy together. And by studying economics, I understood the need to see things in a historical context. It is funny. I have been pushing hard in the IESE curriculum to have in the second year a couple of courses on political and economic history–not just business history. And also another course on the history of economic and political ideas.
Let’s switch gears and go back to the three questions most asked by your MBA students today. In many ways, those questions are a reflection of the school’s success. Ten years ago, students at IESE were more likely to be concerned with placement and networking because the school was less of a true global brand. So what did you inherit when you became dean and what has happened since?
The ability of the person at the top is always limited. As a CEO, you create the context for change and you give people a long-term view of what we can accomplish all together. And then you have to do it. When I became dean, I started by telling people, ‘Look, there are things that need to be improved at IESE. But let’s not forget that this is a school that we should feel proud of. It was 40 years old and it had achieved lots of things. First of all, it had established itself not just in Spain but in Europe. It had already helped eight business schools in Latin America, in China and in the Phillipines. It was a school with a strong reputation in executive education. At that time, the school already had a number of international clients who were going to Barcelona for its customized programs, including Hewlett-Packard, Oracle and Boeing. At that time, the MBA was not a very global program. We took in 200 a year so we had 400 MBA students. Now it’s 580 students.
And it wasn’t considered a global MBA program, right?
At that time, the number of international students was 35% to 40%. We decided we wanted to have 85% from outside of Spain which is what we now have.