After a long day on the conference circuit, I can report that the mood among business people is simultaneously grim (because of the economy) and hopeful (about the Obama administration and his economic team.) Today, I heard from, among others, Hank Paulson, Tom Friedman, Madeline Albright, management guru Jim Collins, Fred Smith (founder and CEO of Fedex), Ed Rendell and Carol Browner—how that’s for name dropping?—and chatted informally with a bunch of senior business execs at the FORTUNE 500 Forum and an earlier lunch at the Center for American Progress. The theme that’s emerging is the headline of this blogpost: That a crisis is a terrible thing to waste. That quote, by the way, is variously attributed to economist Paul Romer, Merck’s CEO Dick Clark, Obama aide Rahm Emanuel and Eric Schmidt of Google and it has become the cliché of the moment.
Some highlights from the palaver:
Paulson, as usual, stuck to his script, even during an unscripted q-and-a with FORTUNE’s Andy Serwer. He sounded less optimistic than he has before—clearly, he won’t be around as Treasury Secretary for long enough to see his tireless efforts to stabilize the financial system lead to a broader economic recovery. His “crisis” argument is that we need to better regulate financial institutions like hedge funds and instruments like derivatives, and come up with ways that unwind non-bank institutions so that future bailouts can be avoided. Paulson said, “We need to get to a place in this country where no institution is too big or too interconnected to fail.” He was quite gracious in his praise for his successor, Tim Geithner.
Friedman did his “green is the new red white and blue” shtick very well—hey, he’s been on tour for three months, he said, for his new book, Hot Flat and Crowded (which I liked but not as much as I wanted to). The Timesman cautioned that the economic crisis ought not to be used for government spending programs, even “green” ones, unless they lay a foundation for future growth. “We are charging this bailout on our kids Visa cards,” he said. “We owe it to them to spend the money wisely.” Friedman also said he was “disgusted” by the performance of auto executives who came to Washington on private jets to ask for government help, without a turnaround plan. “The term bail more than bailout represents how we should be thinking about them,” Friedman said. Ouch.
Albright, interviewed at a FORTUNE dinner at the state department, said bluntly, “I don’t think I’ve ever seen the world in such a mess.” (“That’s a diplomatic term,” she added.) She identified Pakistan as the hotspot that most concerns her because it has nuclear weapons, extremist groups, poverty, corruption and a weak government. (I won’t bring that up tomorrow, when I’m having dinner at the Pakistan Embassy.) But she, too, sees hope amidst the gloom: “Barack Obama’s election is the most amazing thing that could have been done for Brand USA.”
Rendell, the Pennsylvania governor, had a “green” idea that was new to me: Permanently ground the NY-D.C. airplane shuttles and replaed them with speedier Amtrak service. (Planes use more fuel and generate more greenhouse gases than do trains.) A side benefit: “Getting rid of the shuttle would ease congestion at LaGuardia, Newark, Philadelphia and BWI,” he said. He also said he’d heard that you can microwave tires to generate energy, to which Browner replied: “Don’t try that at home.”
Collins delivered a great talk on managing through turbulence at the FORTUNE forum that I won’t try to summarize. He did speak, as he often does, about the importance of core values—to companies and to people. “Those who prevail have a set of values that they go back to, no matter what the world throws at them, and they are not negotiable,” he said. The irony is that those who understand that their values trump even the need to survive have the best chance of coming through hard times. A company’s values and purpose, Collins said, provide “the answer to the question, why is it important that we continued to fight.?” He quoted advice given to him after he lost an academic job by management guru Peter Drucker: “The question is not how do you survive? The question is, how do you make yourself useful?” His final words to the crowd: “Go out and make yourself useful.”
Finally, I moderated what I thought was a lively discussion about energy policy at the FORTUNE forum with FedEx’s Smith, former Bush administration energy official Andy Karsner, Glenn Prickett of Conservation International and Shell Oil president Marvin Odum. There was a surprising degree of unanimity around what the Obama energy policy should be: figure out a way to put a price on carbon emissions (most favored a carbon tax over a cap and trade system), set stricter national standards for building and appliance efficiency, provide longer-term tax breaks for renewable energy and electric cars, and invest more in basic research. It was interesting to me to hear that degree of support for government regulation from a panel that (I’m guessing) was made up of three Republicans and one Democrat. Smith was the only one of the group I’d never met before, and I was impressed; he’s really thoughtful about the question of what markets can do well, and what they can’t, and has devoted lots of his own time to studying energy issues. I’d quote some things he and the others said but I’ve yet to learn how to moderate a panel and take notes at the same time. Happily, no one said that a crisis is a terrible thing to waste.