How MBAs will save the planet. By Bertrand Guilliotin

By now, everyone agrees that global warming is not a result of some mad scientists' imagination.  What we also all agree on is that something must be done at the local and global levels to reduce greenhouse gas emissions so that we can sustain life the one and only planet we can live on.  At least until NASA starts building skyscrapers on Mars, thanks to a joint-venture between Sir Richard Branson and Captain Spock of Start Trek.  Bringing everyone back to reality now, the purpose of this article is actually to highlight similarities between the global crises we have experienced over the last 15 years or so.  Similarities since these crises were caused by one and only factor: human behavior.  As such, we are all guilty but, you guessed it: we can all find solutions if we analyze the root causes and have the courage to make changes.  That's when MBAs will save us all and the planet, I'll explain why later. 

While I am no historian, I need to bring you back to the Summer of 1997 when the first, modern global crisis took place.  It's name: the Asian Financial Crisis.  Within a year, Asian economies went into such a tailspin that some currencies lost 80% of their value and hundreds of billions evaporated.  Along the way, dreams and lives were destroyed.  According to Wikipedia, "the causes of the debacle are many and disputed. Thailand's economy developed into a bubble fueled by "hot money."  More and more was required as the size of the bubble grew.  The same type of situation happened in Malaysia, and Indonesia, which had the added complication of what was called "crony capitalism." The short-term capital flow was expensive and often highly conditioned for quick profit.  Development money went in a largely uncontrolled manner to certain people only, not particularly the best suited or most efficient, but those closest to the centers of power." 

Sounds familiar?  Bubble, hot money...  Where were the MBAs?  Well, not in power, especially not in Indonesia where the Suharto family (and friends) were calling the shots but lacked any advanced knowledge about economics or international finance.  The MBAs, they were being minted at Thunderbird and elsewhere.  Interestingly enough, one of my finance professors there, when explaining this Asian Financial crisis to CEOs at a 1998 conference, was clear about two things: 1) this type of crisis would happen again and 2) it was an opportunity to buy cheap assets from the weakened competition in Asia.  He was right. 

Companies like GE did just that and acquired distressed companies for a fraction of the cost.  Of course, GE has always had a small army of MBAs and a very strong internal education division where legendary CEO Jack Welsh dolled out his precious advice about courage and more.  By the way, why could my professor so easily conclude that the 1997 financial crisis could happen again?  After all, at the time, it was a really bad one and no one was looking forward to this type of contagious phenomenon to crippled financial markets and the like.  Was he a Marxist?  No.  He knew human behavior and the fact that we're all greedy and lazy by nature.  We will typically prefer taking shortcuts to maximize output while limiting input. 

As a corollary, the Kyoto protocol was initially adopted for use on December 11th 1997.  So, since 1997, we have unfortunately witnessed the combined reoccurrence of these two (unfortunate) events. 

Global warming has become a household name and we can only say that the problem has gotten worse.  The polar ice cap is melting at a rate of 9 percent per decade.  Polar bears will soon lounge on the Trocadéro near the Eiffel tower and the tourist will put their pictures on Facebook before putting on yet more sunscreen.  [I know that global warming is no joking matter but seeing all this lightly at times helps me focus on the positive and not the worst case...].   

As a parallel, looking at the global economy, we have outdone ourselves again and globalized the Asian Financial Crisis of 1997.  This happened in July 2007 and in the US.  What caused this (Global) Financial Crisis?  Growth in the housing bubble, easy credit.. sounds familiar?  And of course, a good dose of human behavior at its worst: greed, self-interest, and the arrogance to think that in 2007 we were smarter than in 1997.  This time, however, the crisis spreaded across the globe faster than ever due to increased global interdependences.  Yes, global interdependences are to blame but they are also to be thanked for getting us out of the crisis.  Thanks to concerted and courageous actions taken by central bankers around the world, we managed to get out of this in two years.  Like in 1997, the IMF (International Monetary Fund) came to our rescue.  The difference is in the magnitude of the crisis.  We now use a different unit: trillions of dollars, not billions like in 1997 to measure the impact of our global financial excesses. 

Since these crises are re-occurring instances, aren't' they Global Warnings?  Global Warnings compelling us to take action...  The planet is in the poorest shape it has ever been.  The financial markets are recovering so, of course, we're setting the stage for the next bubble somewhere.  Crises are bigger, they spread faster and last longer... 

With all this, how can I remain positive and think that MBAs will save the planet?  Well, they have already started doing so.  MBAs have understood the above and more.  Their generalist training helps them simplify really complex global issues.  Whether it's organizing a conference about carbon footprint, taking the lead to make their employer go green (instead of going global in my days), MBAs are starting to create a courageous army of leaders who are making a difference by taking action. 

Many MBAs have become social entrepreneurs to help millions of people get out of poverty, access to health care or education.  If you are reading this, you also probably already know that education as a whole has been a global force in solving these issues and more.  That's why I am optimistic. 

We know that in a free-market environment, when government fails, private initiative takes over.  When organizations are not led by courageous leaders who have received an extensive global business training, they fail.  Look at the failures on Wall-Street over the last two years.  How many of the fallen leaders really understood the consequences of their greed?  How many cared anyway?  Now, we know.  We understand the consequences and the damages.  Millions have lost their jobs and fortune (courtesy of Bernard Madoff for the ones who "had the sophisticated opportunity" to fund his ponzi scheme and luxurious lifestyle).  Millions of people lived beyond their means in the US and elsewhere.  This is no different than the way we have been living and exploiting our natural resources. 

By the way, I am also "glad" that this Global Financial Crisis originated in the U.S.  Yes, my name is French.  I was born and raised in France but that's not why I'm glad.  I earned my MBA in the U.S. and have been living in the "el-dorado" since 1996.  Why am I still there?  Because the U.S. still delivers on its  promise to be the "Land of Opportunity."  No, it doesn't mean that you will become rich by coming here to get your MBA and by staying here.  What it means, in my opinion, is that you will be able to maximize your potential if you work hard and are courageous.  The U.S. culture (naively optimistic at times but much more entertaining than the fatalistic outlook on life, if you ask me) will help you unleash your potential.  Unleashing your potential and "pursuing happiness" is in the American DNA.  It is reflected in the way the U.S. institutions operate and the way people do business.

It's no surprise to me that the first MBA was established by Harvard in 1908.  Yes, you can argue that, since then, we have had the 1929, 1997, and 2007 crises that no MBA could stop.  However, the big difference today is that MBAs have a much better understanding of global challenges and opportunities.  They are more humble than some of their predecessors who believed that MBA=CEO.  They are hard-working and more team-oriented than ever before because they know that no single mind can solve the daunting problems that our wonderful human behaviors have created.  They also have this infectious enthusiasm to fix the world that makes them so fascinating to be around.  I know that they will fix our planet and I thank you in advance for your contributions if you decide to become one of them!

Bertrand Guillotin is P.I.M. Chair for North America and Director of the International Center at Duke University's Fuqua School of Business, Durham, NC - USA