John R. Wells: Tougher regulations should not discourage firms

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AS of spring 2008, Lausanne, Switzerland-based business school IMD will have a new president – Dr. John R. Wells. He will replace current President Dr. Peter Lorange, who has led the school since 1993.

Upon hearing the news of his appointment, Wells said:delighted and honored. IMD is one of the best business schools in the world. Peter’s strong leadership has built IMD into the premier institution it is today and his shoes will be difficult to fill. With the support of a great faculty and a very strong board, I am confident that we can enhance and grow this fine institution into an even greater global presence.”

One of Lorange’s legacies that Wells should preserve or expand is the increasing popularity of IMD for executives in Asia, including Southeast Asia, as one of the schools that offer the world’s best business and management programs.

In an interview with The Jakarta Post last year, Lorange said the number of IMD students from Asia had been growing very fast. According to him, Asian students account for close to 30 percent of the total IMD students, with approximately 7 percent from the Southeast Asian region, 7 percent from Japan and 7 percent from the Middle East. From Southeast Asia, students mostly come from Singapore and Malaysia but the number of students from Indonesia and Thailand continue to increase. “Most Indonesian participants who come to IMD are senior executives who opt to attend our two- or three-week programs. They are busy and do not have much time to spend outside their office,” Lorange said.

Wells, Professor of Management Practice at Harvard Business School and seasonal business leader, promises to attract a larger number of people from all over the world, including Southeast Asia, to IMD. “We would very much like to increase the level of participation from Indonesia, which we see as a major player in the region with a rich heritage and a huge potential for growth,” Wells told the Post in an e-mail interview following his appointment as the future president of IMD.

Wells said IMD has several advantages that led him to join the school, that is “its superb faculty, top-rated MBA program, focus on executive development, great location, strong ties with theWho’ of European corporations and global reach.”

The fact that the school is located in Switzerland is another plus. “Switzerland has a long history of neutrality which fosters an open atmosphere for intellectual debate on thorny and global issues. It is positioned in the center of Europe and yet remains independent of it. It is a global intellectual crossroads between east and west, north and south,” Wells said.

He noted that IMD’s leadership programs and research centers were addressing the core concerns of many global companies: building global organizations, effective execution, leadership, corporate responsibility and sustainability. According to him, the biggest challenge facing business today isto change, how to change and how much to change. “The world is becoming a very different place. Globalization is driving people to re-think their business models. IT and peer-to-peer based social networks are really undermining the basic logic how organizations have been structured in the past. So companies have to change. If they don’t change, they will inevitably die,” Wells said.

Corporate responsibility and sustainability has also become a crucial issue in business, he said, adding that the global trend is that countries tend to produce more regulations governing the matters. As far as regulations on corporate responsibility and sustainability are concerned, the issue is that not all countries regulate these matters in the same way.

Companies based in countries with tough regulations feel disadvantaged when competing globally with companies from countries that have more relaxed laws. As such, they lobby for less tough regulations.

Wells noted that while a laxer regulatory regime would provide advantageous for companies in the short term, it would hurt them in the longer term. In fact, it is often the countries that are the toughest regulators that create the most competitive firms because their firms learn to meet regulations first and become more competitive as a result. That is why, said Wells, European auto engines are typically more much fuel efficient than American ones. “So firms that face tougher regulations with respect to environment sustainability or social justice should not necessarily despairthe global trend is towards more regulation in these areas,” Wells said.

With regards to corporate social responsibility programs, Wells said sometimes the programs are born out of a genuine sense of social responsibility and sometimes because the firms are bowing to pressure groups. Thus, he said, it is important to research the costs and benefits of such programs. “In practice, the costs are not always very high but the benefits can be considerable. But the analysis is not easy,” Wells said.

According to Wells, since 1999 IMD has been running a research platform called “Corporate Sustainability Management” (CSM) that addresses the challenges of integrating social and environmental issues into a corporate strategy (beyond compliance). The platform has a membership of 30 global companies from diverse industries including Royal Dutch Shell, ABB, ABN AMRO, Syngentia, Nestle, Unilever, Tetra Pak‚ and Swiss Re.

Regarding executive education, Wells said the biggest trend now is for companies to be more sophisticated in selecting education programs for their executives. More and more companies are opting for customized programs that are designed to solve certain problems confronting a particular company, rather thanprograms”, where executives from various companies gather to discuss problems.

“It is rather ironic, by the way, that very often executives are much happier talking about their problems in their company with executives from other companies than with executives in their own company. But, nevertheless, customized programs are growing much stronger than open programs,” he said.

Another trend in executive education is, Wells said, the fact that MBA education has become highly competitive. MBA education is consolidating in the U.S. but is growing elsewhere in the world. In order to remain on the top, an MBA school should offer a program of very high quality.programs in the United States – there are many hundreds of them – are not growing anymore. Around the world, they will continue to grow. And outside the United States (there is) a very strong growth in master’s programs for people going straight from university as opposed to having any business experience,” Wells said. (Johannes Simbolon)

The Jakarta Post – December 05, 2007