The six most difficult words: I'm sorry, I was wrong

Last weekend I participated in the wedding ceremony of my cousin in Belgium, and during the service, a text was read that contained amongst others the "six most difficult words".  And though of course this made reference to the marriage, it really revealed a number of things to me.

On my way there, I read in le Monde of April 24 a summary of a speech of David Schmittlein (Dean of the Sloan School of Management, MIT), that he held in Paris. He stated that the current crisis should be an opportunity to change the behavior of managers, and in particular to learn them to be more courageous. Courageous for him means implementing long term strategies. His speech went strongly against what is classically heard in Business Schools. He stated that we have thought for decenia that the goal of all good managers is the maximisation of the shareholder value, and the shareholders, of course, are very often just in for a short term profit.

In De Standaard (a Belgian newspaper) I read a funny title: "Mobistar disappoints: the results of the telecom operator are below expectations".  But why is nobody writing: "Interesting news: the expectations of Mobistar are above reality"? There is of course no real reason to choose for the one or the other.

And in the same newspaper, Peter Vanden Houte expressed his worries for a "capitalism that would be too much controlled". Vanden Houte is chief economist of ING Belgium (that recently was saved from bankruptcy by the Dutch Government). He did admit that Greenspan ignored all warnings about the subprimes. But at the same time, regulation should be avoided. He claims that China's success in the last decade is due to the liberalisation; or is it precisely the fact that the central organisation (yes, it is still communism) is able to build the infrastructure and protect the investment of foreign companies?  That is at least the opinion of managers operating over there. In the 60s, 40 millions of people would have died of starvation due to centralism according to him (or is it just due to a very classical orientation, that would have failed  in any system?) With ING we are very happy with the much better salaries and working conditions that the current Chinese workers have (and by the way, 40 years later). I felt a bit back in the 90s of last century.  That period is over, isn't it, and we are now trying to learn from our most recent crisis. Isn't the real risk for capitalism related to its inherent short term focus and the bonus culture, reinforcing this ? 

Note that the Business Schools are in general very absent in the debate around the financial crisis, and the reason are the six most difficult words. But if we want to avoid the next crisis, we indeed need to deliver those courageous managers, that are able and willing to think in the longer term.  We are sorry, we were wrong. And it is certainly not without reason that the Sloan School Dean says this.

Oh yes and he said something else very interesting. If the crisis invites to teach new strategies, it will equally change our way of teaching, with a real opening to the world (not just in the cases). A systemic approach, no ? Yet another difficult word. 

Comments

[Peter Vanden Houte]

Dear Professor, I am truly honoured to find out that at least someone is reading my newspaper column (I was wondering how many controversial things I had to say before someone would ever react).
That said, you choose to quote very selectively. I did not warn against regulation. I rather said that we should avoid in moving from a situation of too little regulation to a situation of too much regulation. I don't really see how your statements on China conflicts with what I wrote. One of the main tasks of a central authority in a capitalist system is to provide public goods (like infrastructure) and guarantee property rights (I wasn't aware that a truly communist system was so fond of individual property rights).
In that sense one can say that China moved to a more capitalist system. To quote Dend Xiaoping "We mustn't fear to adopt the advanced management methods applied in capitalist countries (...) The very essence of socialism is the liberation and development of the productive systems (...) Socialism is not imcopatible with a market economy"
On the great famine in China, it would be a bit easy to say that it can be explained because it was 40 years ago and entirely due to the less advanced state of the economy at that time. Some of the economic follies of chairman Mao have certainly contributed to this disaster (with farmers melting their ploughs to "produce" steel...)
I totally agree with you on the short term focus of financial markets pressing managers to adopt the same stance.
On ING, I don't think the Dutch taxpayer will loose out in this deal, on the contrary: for the time being it is contributing to state income.
Banks have certainly made major mistakes over the last five years or so. But the origins of the current crisis have more causes than just banks "screwing up". But then again, it is much easier to represent them as the only vilains in the story to the general public.
best regards

[uggs boots]

That was one of the funniest things I think I've ever read.
I'd be honored if you would consider linking your blog to mine
Keep up the good work-- and to the Cons who are complaining, you really need to work a little harder at reading comprehension.

[Dissertation Writing]

You tell absolutely right about the current crisis should be an opportunity,which is about to change the behavior and about the things which have to be look out,and about the Business Schools are in general very absent,you told,so this is sort of right thing and really useful to read all the things that you share.

[Dissertation]

The things you share about the wedding ceremony of my cousin in Belgium,it is always feels great when you are attending the wedding of the friend and specially in the Belgium,because the atmosphere and the weather in that place doubles the enjoyment and the pleasure is absolutely awesome,really beautiful to read some of the things that you told.

[Dissertation]

The things you share about the wedding ceremony of my cousin in Belgium,it is always feels great when you are attending the wedding of the friend and specially in the Belgium,because the atmosphere and the weather in that place doubles the enjoyment and the pleasure is absolutely awesome,really beautiful to read some of the things that you told.

[Dissertation Writing]

The six most difficult words: I'm sorry, I was wrong <--
that's what i was looking for

[Wood Pellets Fuel]

nice post

[Door Sprayiing]

Accepting your fault is a bit hard but afterward it will be rewarding specially when the person whom you made the mistake forgive you. It's always better to tell the truth, because truth always sets you free.

[Locked Out in Bournemouth]

A heart warming truth about saying sorry. Though its hard to accept once fault but it will make you feel good.

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I think they got the right person for the job. I definitely want this person running the show here. This is definitely an easy choice...

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This is a very good news for the locals for the ones who are unemployed. I will make certain to bookmark this post.

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[Research Proposal Writer]

A conflict is never really resolved until someone apologizes. If you have done something to upset your girlfriend, tell her you are sorry, even if don't feel you did anything wrong.

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Fantastic post and wonderful blog, I really like this type of interesting articles keep it up.

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you are so funny,i am so love you

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