Remarks to the Class of 2019
IE University, Madrid
July 19, 2019
President Alcázar, faculty and staff, and—most importantly—to the Class of 2019: Congratulations! I know how hard you’ve worked to earn the achievement we honor today.
I also know your success required a lot of love, and maybe a little patience. So, graduates: Please join me in thanking all of your friends and family, those who are here, and those cheering you on from afar. This day belongs as much to them as to you.
Class of 2019: You graduate at a moment when our planet faces two interconnected crises. Crises that affect us all.
First, there’s inequality.
Income inequality continues to increase, widening the gaps between the richest and the rest of us. Right now, eight families have as much wealth as a full half of the world’s population. And this does not even begin to capture the other forms of inequality that keep so many people from rising. Inequalities experienced based on gender, based on race, based on sexual orientation, based on the disabilities a person lives with. The list goes on and on.
The second crisis is climate change.
The United Nations has recently warned us that we have only 12 years to make drastic changes to the way our governments and companies and society operates. Let me say that again: 12 years.
If we do nothing, or only take small steps, we will not be able to slow the effects of extreme heat, drought, and floods – and all of their consequences, from food shortages to refugee crises. And it will not surprise you that climate change has and will continue to affect the most vulnerable in our society.
Whether we’re talking about rising inequality, or rising temperatures and sea levels, it’s clear that our society needs to change. And that change will need to come from all sectors of our society—from governments, from non-profits and philanthropy and civil society—but especially from our economic system.
Both of these crises have been aggravated by capitalism—irresponsible capitalism that prioritizes short term gains over long term value. And because of these two problems coming to a head, capitalism is at a tipping point.
Right now, businesses and their leaders can choose to continue contributing to the problem…. or start building the solution. And I’m not the only one who thinks this. According to the most recent Edelman Trust Barometer, 76 percent of people say “CEO’s should take the lead on creating needed change.”
Graduates, while I know that you are not CEOs yet, as rising leaders of the global business community, I believe you too can—and must—help advance this needed change. And today, as you prepare to write the exciting next chapter of your careers, I’d like to talk about how we can advance such change.
If we are going to change the world of business, we need to change how businesses—and business leaders—approach the world. We have to examine our current systems and reconsider how they work on behalf of all people. In particular, I believe there are three things that all 21st century business leaders will need to do:
1) build long-term value,
2) recognize all of our stakeholders, and
3) measure our social impact.
And I want to talk about each of these for just a moment.
First, we need our business leaders to stop thinking in terms of short-term gain, and start thinking about building long-term value.
It’s the reason you’re here at IE. With every class you took, and every lesson you learned, you have invested in the long-term value of your skills and your career. And companies need to do the same. They need to look past quarterly returns, and see the bigger picture.
Could you imagine if in three months, your supervisor asked: I know you earned a degree last quarter, but how many degrees have you earned this quarter?
Of course not!
But this is how too many managers, investors and market analysts have come to view business performance and success. And this short-term mindset doesn’t merely prioritize shareholder value. It also devalues the investments we make in our future.
The future of our employees. Of our communities. Of our organizations. And of our planet.
And our businesses too. Companies that focus on long-term value out-perform. In the words of a classic text, those companies are built to last—to contribute and innovate for the long haul.
So, first, we have to start valuing the impact our choices and investments have over the long term. And to do that, we need to understand who our investments affect.
That’s why, second, we need to recognize all of the stakeholders in our work—not just the shareholders.
We know that every action we take—or an organization takes—affects countless people. This is particularly true in our interconnected world and global economy.
While trust in government institutions have declined, and while some seek to close off connections and relationships—to build walls instead of bridges—many of the companies you will work in cannot afford to do that.
International corporations operate across borders and continents, defining how billions of people live and work. And the best way to recognize stakeholders, and address the problems they see. is to listen to them. To lift up their experiences of the world. Give them a seat at the table, and a role in the decision-making process that affects their lives.
To that end, there is a powerful principle I learned from the disability justice movement, one that seems to be the best guidance for how we can be more inclusive of stakeholders outside a boardroom or an earnings call.
The principle is simple: “Nothing about us without us.”
And for businesses, the implications are clear: No decisions about workers, without consulting those workers. No policies that impact a local community, without listening to the local community—whether here in Spain or anywhere else across the globe. No actions that impact our environment, without considering how it affects the planet and people who share and depend on it.
And even if you are not in the most senior positions just yet, as an employee you can ask for—and even demand—the kinds of shifts in perspective we need.
And finally, we need to start looking at the bigger picture, beyond profit, and measure other kinds of value.
And this doesn’t only apply to businesses. As students, you have a clear analogy for measuring different kinds of value.
In educational settings, the way we typically measure success comes down to grade points or class rankings—the marks you get on exams or other forms of evaluation. Here at IE, when you finish a class, if you did well, you might get honors, or excellence. If you didn’t do as well, you might get a pass, or even a fail.
Of course, these academic assessments and achievements are important. These measurements are necessary. But there is so much more that goes into your education that does not make it onto your transcript.
There are other measures of success that will serve you in your life and career, that contribute to your overall excellence as a person.
• Did you grow in your understanding of the world?
• Did you experience the city where you lived, take in its art and culture and community?
• Did you contribute to that community?
• Did you build relationships and friendships with your classmates and faculty? Did you come to understand experiences different from your own, and expand your perspective?
In the same way that we do not expect universities to do away with academic assessment altogether, we cannot expect that businesses will ever stop caring about financial performance.
And they shouldn’t. That kind of information is still important. It’s part of the scorecard that matters—but only a part.
We can expand the assessment of businesses to other kinds of value, and we have ways to measure it. We can ask:
• What contributions does this business make to the places it operates?
• What investments have you made for the long-term health of this community?
• How many workers escaped poverty or attained a middle-class income in your supply chain or among your employees?
• In other words, are people and the planet better off because you were around?
If we can get comfortable with those indicators of value, we will see lasting, tangible benefits for the world around us.
Class of 2019: Even though I am the president of a philanthropic foundation, what I am suggesting is not about philanthropy. It’s not giving something away.
It’s taking the larger, more inclusive view of the very purpose of business and its relationship to society. It’s about better business strategy—and better leadership.
Most importantly, we need a strategy that transforms our economy and society. That lifts up all stakeholders and communities. That encourages responsible, sustainable, shared success. Not just today, but long into the future.
Fortunately, there are already companies around the world starting to lead this change—from Chobani to Costco, Natura and Nestle, Patagonia and Unilever.
And beyond individual organizations, there are global movements pushing for a more inclusive capitalism. Just look to the rise of benefit corporations and impact investing, or the recent calls of chief executives for corporate purpose, and long-term value.
As graduates of this extraordinary institution, you are prepared to take the progress happening right now and spread it far and wide.
You value the very kind of economic and social innovation that will be necessary if we are going to make these drastic changes before time runs out. You understand the need for humanity—not just as part of the business education, but as core business practice. And you have the global vision necessary to inspire global action and build lasting global relationships. Indeed, you’ve already created a diverse and connected global community right here at IE.
That’s why, despite the enormous challenges we face, I remain optimistic—radically optimistic—because I know that your energy and intelligence, your creativity and drive, your purpose and passion, will help push every organization you work for closer to justice.
So, I urge you to be the leaders we need. I urge you to keep building long-term value—for yourself, and for others. Keep listening to all your stakeholders, and including them as you make decisions. Keep valuing what truly matters.
Thanks to you, and your leadership, I know we will be prepared to take on the challenges ahead, and build a better future.
Congratulations. We’re counting on you!
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