Last night I attended a reception for prospective applicants in Buenos Aires, Argentina. The turnout was much larger than expected, the biggest I’ve seen in Latin America. Mexicans surprised me as well last October. Over the next few days, I’ll visit Brazil—it seems that we will host a good turnout of interested people there. Latin America is a growth market for Darden.
Growth in MBA applications is, I think, an optimistic signal about people and economies. Indeed, emerging economies have been a great focus for equity investing in recent years. Next month, Darden will co-sponsor a special conference with the New York Stock Exchange and others on investing in emerging markets. Maybe the rising interest in the MBA degree here is simply a reflection of the build-up of economic steam.
Unfortunately, in private conversations, you hear another, more sobering, story: heavy regulation, high taxation, and the insidious black economy, all of which drag badly on the incentives necessary to ignite business formation, lure investment capital, and stimulate job creation. Such problems are endemic to virtually all emerging economies. I strongly recommend the writings of Hernando de Soto, a Peruvian, who has admirably documented the deadweight costs on business in these countries. How to lift the deadweight is the focus of a vigorous debate among economists. In the early 1990s emerged the famous “Washington Consensus” agreement among the World Bank, IMF, and U.S. Treasury on the advocacy of a shock treatment of free-market policies to liberalize emerging economies and stimulate investment there. Today, critics on the Left, such as Nobel Laureate Joseph Stiglitz, argue that the Washington consensus was too shocking to emerging economies and tended to favor the wealthy classes. Other critics, more toward the Right, such as William Easterly, argue that the consensus was implemented badly and/or did not go far enough. No one seems to be happy with the conventional wisdom about promoting growth. Now, the vacuum of policies in Latin America is being filled with worse ideas: in some countries we see a resurgence of socialist policies that were discredited in the 1980s; elsewhere we see the rise of virulent populism. No one knows where this will lead. But in the past, such ideologies have impoverished the countries that implemented them; then a crisis ensued; then voters came to their senses. So the cycle goes.
My take on the buoyant interest in the Darden MBA here in Latin America is that talented young people are looking beyond their borders for promising new ideas around which to make a meaningful contribution with their lives. To the nationalists, populists, and socialists in the region who object to this mobility, I ask four questions:
**Do ideas stop at borders? They do not. Since the mid-1990s, we have seen the emergence of a set of global best practices that can, must, and are being implemented anywhere. Consider the spread of lean manufacturing concepts—these originated with Toyota in Japan and now form the standard of excellence in many manufacturing industries around the world. Or consider the techniques of financial engineering, originally applied in New York and London and now the global gold standard as evidenced by the rigorous curriculum of the CFA certificate. Ideas have legs.
**Who are your competitors? After careful reflection, very few people will reply by pointing to another domestic firm. In Thomas Friedman’s famous phrase, The World is Flat. Your most dangerous competitor may well be on another continent. The large implication of this is that the best students in any country should study global best practices. Indeed, the best thing they can do to prepare for a successful career in business is to learn about a wider range of competitors.
**Does cultural understanding matter? It certainly does. We all know people who are uncomfortable in a culturally diverse setting—such discomfort limits their professional effectiveness. Language, savoir faire, and tolerance for differences can enable the professional to seize opportunities and deal with challenges more effectively.
**Why can’t you induce the diaspora of your talented young professionals to come home? The only inducements that work are positive. We see in China and India the rising volume of MBA’s returning from America—drawn by the incredible rates of growth in these countries and the huge opportunities to create value and have an impact. Remember the deadweight that Hernando de Soto describes—if you lift that deadweight you will win back the human capital your country needs.
In 1855, my great-grandfather left a farm in Illinois to study in Germany. He went on to serve in the Union army during the Civil War, then became a state legislator, and president of a small college. His son also studied in Germany and became a professor in Indiana. In their day, Germany offered the best scholarship in the world—they went there to get it and brought it home. America in the 19th Century was roughly the equivalent of Brazil, China, or India now. My ancestors did what I advise young people today: go anywhere in the world to study with the best and then apply your knowledge where your impact is greatest.
There is an optimistic postscript to this discussion: My visits with our alumni throughout Latin America show that you can go home again. Often they return to family businesses, bringing with them the global best practices those firms need to survive. Some have started new businesses based on an understanding of new technology or products. Others have brought capital and practices to address social problems through politics, philanthropy, and charitable work. Darden is proud of its alumni who make these contributions and welcomes those applicants of vision and energy who believe the world is their stage.
The related postscript is that Darden has an active interest in strengthening indigenous business schools. We actively share our intellectual capital by making our teaching materials available and by training teachers to learn our techniques of case discussion leadership. We believe that by helping other schools grow stronger, Darden grows stronger. The management education industry is not characterized by zero-sum competition: by promoting the spread of best practices, we all benefit. Our partner schools around the world show great determination to rise. We want to be part of their success.
For its own part, Darden has many features that help students reach across borders. These include exchange programs, courses in foreign countries, a diverse faculty and student body, and a collection of teaching materials set in foreign countries. In the coming years, Darden’s own global reach will expand.
“Quo Vadis” is Latin for “Where are you going?” and is the title of a novel that won the Nobel Prize for Literature. This is a radically important question for the most talented people in the world. Simply to ask, “where,” opens possibilities of new countries and regions, as well as personal impact and great reward.
Posted by Robert Bruner at 02/02/2007 09:03:07 PM