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FEATURE BUSINESS IN TRANSITION
POST-CRISIS MANAGEMENT:
WHAT CAN WE DO
DIFFERENTLY?
Recently a group of senior executives gathered with RSM leaders to discuss the
pre-eminent topic in the world of business and management: the economic crisis.
This informal meeting turned on three questions: how we got here, what has to change,
and how RSM can create a positive impact on the future business leaders that fill
its classrooms. This is what we heard from the participants. Text Lesa Sawahata
Question One: What got us here?
THE ENTREPRENEUR: We’re too late to do something for this
crisis, which I think will last about one and a half years. Should
we not focus more on anticipating the outcome of this crisis,
instead of bothering ourselves about what happens this year?
THE LAWYER: It’s always a problem when you ask, how did we
get here? I’m sure after every recession people ask that question;
the problem is that they come up with solutions for what happened,
instead of solutions for what will happen next time around.
Spending a lot of time working out ‘what went wrong’ won’t equip
us for the future.
THE NON-EXECUTIVE DIRECTOR: I’m thinking about the word
‘values’. What we’ve seen is a real misalignment of values.
Management at some companies are voluntarily taking a 5 per
cent pay cut. However, banks won’t do that. And I think that will
cause a social revolt. When is the penny going to drop? When will
people realise they are paying the price for something they had
no responsibility for?
THE BANKER: I think one of the basic issues was a complete
underestimation of risk in the broadest sense of the word. There
has been a fundamental disregard of risk in the last 10 years. This
is increasingly hitting home. Risk pricing has changed dramatically.
If I look at my own experience as a banker, we have felt that
‘liquidity is free’. Now liquidity is very expensive. And there’s
volatility risk - every single company in the world is confronted
20 RSM OUTLOOK SUMMER 2009
with volatility risk. That is one of the most important sources of
the crisis and one of the most important areas of concentration
for business education.
THE CEO: This has been aggravated by the fact that there was
not enough willingness to control, because there was a vague
ideological idea that greed was good.
THE ACADEMIC: From the media, I’m getting two opposite
messages. One party says it’s a moral crisis; the other says it’s just
the limits of capitalism.
THE CEO: I think the moral crisis caused the other crisis.
THE FINANCE THEORIST: It was a technocratic view of risk;
people had a very fundamental misunderstanding of risk.
THE CEO: The investor got so far away from the debtor.
The distance between the creditors and the debtors created
the risk.
THE ACADEMIC: Another side is the effort of governments to
contain risk through regulations – this may stifle further economic
development, that’s the backlash.
THE EXECUTIVE RECRUITER: Government reacts to public
opinion. The conversation about risk has left the boardrooms…
because the people are mad now and they appear to have the
media on their side.