John Micklethwait, Editor-in-Chief of the Economist, one of the world’s leading business and current affairs publications, recently visited Sauder and gave us an exclusive interview. An award-winning journalist, prolific author and broadcaster, Micklethwait draws on his background in history and banking to offer a unique perspective on today’s complex economy.
Q: Where is business leadership headed in today’s uncertain economic climate?
JM: I think corporate leadership at the moment is quite battered and there’s a degree of everyone watching each other and trying to work out what to do next. Previously, we went through a phase with larger than life bosses, like Jack Welch [former CEO of General Electric]. Now things are more low-key, with a general focus on the long term. Paul Pullman, who runs Unilever, is typical of a slightly less aggressive yet still very demanding leader. In a recent speech, he discussed why the long term can pay off for companies.
Q: How do you see business schools, or specifically MBA programs benefitting the economy?
JM: I think the business of business is incredibly important. So the training that MBA programs give is good and useful. And when MBA students transfer their knowledge to help companies do better, society does better as well. I’m also encouraged to see MBAs are now paying more attention to what happens inside government and non-profits. The level of best practice that could be spread through the public sector is a huge area in need of work.
Q: In our revamped MBA program at Sauder’s Robert H. Lee Graduate School we have introduced a career track on business innovation and entrepreneurship. How important is innovation in today’s global marketplace?
JM: I think innovation in business has seldom been taken quite as seriously as it is now. You look at companies that are worth a great amount - like Apple - it’s all about ideas. At the moment, particularly in the western world, the companies who are doing well are the ones who continually produce clever ideas.
Q: Creativity is central to our MBA program. How are you seeing creativity play out in the marketplace?
JM: If you are running any Western company at the moment, you’re desperate to find creative types. I use the Apple example again - it was smart people who created billions of dollars of value for Steve Jobs. Managing creative people is crucial though. Give them too much space and they go off and create mad projects. Give them too little and it goes wrong. Companies need to give them some degree of freedom, maintain ethical standpoints and allow ideas to travel.
Q: What would you recommend business students aim for, career-wise?
JM: If you imagine that there’s going to be some fundamental rethinking of the state [and the services it provides] in the near future, then anyone involved in outsourcing or anything related to that, is likely to make a huge amount of money.
Q: You say that global politics and our economy are intertwined, can you please provide an example that best demonstrates this?
JM: One which would have a startling effect on markets and everyone’s lives here has to do with Iran and Israel. If you think there’s probably a 40% chance of Israel attacking Iran, well then you’d be looking at $200 a barrel of oil.
Q: Will we lose the Euro?
JM: I think the Euro is probably likely to continue. Firstly, the costs of disintegration would be so gigantic that once Europe goes to the edge of the precipice on that they’ll always pay up. There’s also a much stronger commercial and political establishment in Europe than elsewhere in the world – one that’s still very committed to the idea of the Euro somehow coming through.
Q: What country or region do you consider the best place to invest in?
JM: About 10 years ago we ran a cover on Africa as the “Hopeless Continent.” But if you look at the fastest growing economies at the moment, a huge number of them are in Africa.
Q: How can we reach a balance between sustainability and creating thriving businesses?
JM: On the whole capitalism and goodness aren’t in competition. Companies that look after their customers do well and attract the ideas people I’ve just mentioned. People give Bill Gates a lot of credit for his philanthropy, but the real thing he did was to make computers vastly more available to the world through Microsoft.
Q: Prosperity and democracy: can and will they co-exist?
JM: We have lived in an era of more, and that’s been how democracy has worked - people vote for a government that gives them more. So democracy and capitalism have flourished alongside each other. But what has happened recently is that government is beginning to run out of money. Look at America who is giving out welfare payments on deficit - that’s a pretty straightforward prescription of one generation stealing money from the next rather than investing in the future. That will make life more difficult.
Q: Do you have reason to be optimistic about the future of the West?
JM: Yes, things are not necessarily worse than you should expect them to be. If you look back over economic history we’ve had plenty of similar balance sheet crises. On the whole it takes about six or seven years for countries to work through them.