By April 16, 2004
After attending an informal luncheon with 35 students from the Johnson Graduate School of Management, Stephen Friedman ’59, President George W. Bush’s assistant for economic policy and director of the national economic council, addressed a full Statler Auditorium yesterday to speak about the country’s economic situation. Friedman was appointed to his current position in Dec. 2002. His economic experience includes working with Goldman Sachs & Co. for 28 years, serving as co-chair for two years and chair for two years. Friedman then became a senior principal at March & McLennan, where he stayed until his political appointment. Friedman’s address came on the second day of the two-day “Managing the Future” summit at the business school. Robert Swieringa, the Anne and Elmer Lindseth Dean of the Johnson Graduate School of Management, said, “Most of Thursday is really looking to the future.” Opening his address, Friedman said that he spent his time as an undergraduate split between Teagle Hall and various sororities. “My time was extremely well spent,” he joked. In his introduction to Friedman’s lecture, President Jeffrey S. Lehman ’77 recognized the speaker’s athletic accomplishments at Cornell. He was inducted into the Cornell University Athletic Hall of Fame in 1984 for his success as a college wrestler. Friedman, whose wife Barbara Benioff Friedman ’59 is vice chair of the Board of Trustees, serves on the Athletics Advisory Council. The Friedman Strength and Conditioning Center and the Friedman Wrestling Center, the first facility in college athletics to solely house wrestling, were named to honor the family’s significant gifts to the University. Friedman spoke about the many levels of the American government system from an insider’s view. Comparing it to other organizations, he said, “there is none more complex than the U.S. government.” Each of the many committees and interest groups “sees one aspect of the elephant,” he said. Because there are so many departments within the government, Friedman stressed the importance of “a coordinated approach” to tackle all political and economic issues. Friedman then turned to create “a snapshot of where we are today” in business. He spoke about the many “bubbles” that have popped over the past few years, including the stock market dip in 2000, an “excess of business optimism” that led to dangerous capital spending and the collapse of the job market. The wars in Afghanistan and Iraq, according to Friedman, “weighed on business confidence.” He claimed that despite the “dire effect” of corporate and accounting scandals, the employment crisis is starting to turn around. Even though there is some recovery, Friedman said, “labor is clearly not yet satisfactory.” The majority of Friedman’s address focused on the need for strong federal fiscal policies and the importance of keeping America’s economy flexible. After the Jan. 2003 tax cut, Friedman said, business capital spending improved, causing an increase in consumer confidence and spending. This resulted in a more stable stock market, which is now helping to strengthen the labor market. “We have that vibrancy” to recover from a “nearly catastrophic series of body blows,” Friedman said as he touched upon the economic effects of the terrorist attacks. Friedman then discussed what he sees to be some of the weaker parts of the American economy. He first mentioned the “lawsuit burden,” the harmful economic repercussions of having high administrative costs in a very litigious society. Friedman also said that the cost of health care has resulted in a decreased efficiency in the industry. “Efficiency … is back where American industry was 25 years ago,” he said. We must work on “finding that combination of incentives and stimuli” to make health care as efficient as a Fortune 500 company, he said. Friedman said that there does not have to be a tradeoff between health care quality and efficiency. Rather, he suggested, “they go hand in glove.” He also mentioned the need for a new energy plan so that businesses are not driven offshore for cheaper energy. Finally, Friedman spoke about the need for a globalized economy. “This administration has a very strong free-trade orientation,” he said. “Anything that puts up barriers runs the risk of having retaliation. We want to avoid … a tit-for-tat world,” he explained. The address continued with a few minutes about education in America. Friedman said, “The living standard [is] tremendously correlated to the level of education” a person receives. He said that while graduate and higher education in America are “the gems of the world,” our country’s lower levels of public education are weak. “We have a major challenge,” he warned. “Economic forecasting is an enormous challenge,” Friedman said regarding the summit’s title. Because “the pendulum always swings too far one way and then too far the other way … people get overly optimistic and then they sink into a trough.” In his introduction, Lehman called the summit’s speakers a “cavalcade of great thinkers.” Earlier in the day Walter LaFeber, the Andrew H. and James S. Tisch Distinguished University Professor spoke on “Globalization and Globalizers.” Jay Walker ’77, Founder and Chair of Walker Digital, LLC and Founder of Priceline.com followed LaFeber with an address. Warren Staley MBA ’67, Chair and CEO of Cargill, Inc. lectured on the topic “The Future is Now: Building a Global Sustainable Enterprise.” Abby Joseph Cohen ’73, Managing Director and Chair of the Investment Policy Committee at Goldman Sachs lectured on “U.S. Companies and Markets back in the Global Flow.” Later in the afternoon, there was a panel discussion on “Entrepreneurship in the 21st Century.” The final address was by Jeffrey Immelt, Chair and CEO of General Electric Company and this year’s Robert S. Hatfield Fellow in Economic Education.Archived article by Melissa Korn Sun Senior Writer
By April 16, 2004
Chair and CEO of General Electric Jeffrey Immelt delivered the 2004 Hatfield address yesterday to Cornell students, faculty and the public. His talk, entitled “The Innovation Imperative,” focused on the importance of innovation and growth for corporations in the coming decades. Immelt began his talk by stating, “When you wake up today in April of 2004, here’s what you see — the economy is better than it’s been in four years, the consumer remains strong, interest rates are low, the credit markets are stable and the government has got every stimulus known to man going in the economy … But everything I just said is more or less irrelevant to running a good company.” Immelt listed five main trends that explain the importance of innovation in today’s world. “First, we live in a slow-growth time — no place in the world has enough jobs,” he said. “When Cornell graduates leave this place, they’ll enter a world growing even slower.” Immelt went on to speak about new competitors, distribution-based changes, demographics and the volatility of today’s world. “Reacting to these five things is what I’m concerned with,” Immelt said. “It’s going to be a world where competition will be about innovation; if you can’t grow, you can’t survive … Without innovation, without technology, G.E. won’t see the next 100 years.” Global competitiveness and cash flow also figured prominently in Immelt’s speech. When choosing which companies to invest in, Immelt said, he looks for five traits — a solid technological foundation, consumer interface, a global foundation, multiple revenue streams and capital efficiency. “Every initiative we have inside our company has to do with growth,” Immelt explained, and listed four — technology, customer focus, sales and marketing and globalization. “That,” he said, “sets the strategy.” Immelt also gave his audience tips on effective innovation. “First, you have to focus on people and processes,” he began, adding that G.E. uses three-year plans to achieve success. He also said that the next 20 years “will be all about the economics of scarcity,” listing the growing scarcity of energy, health care, security and water as examples. “It’s also important to make size an advantage … and never make it a disadvantage,” Immelt continued. “We want to grow businesses … We want to take small ideas to big places.” Knowing how to make money, he added, is also crucial. “I work at G.E. because I want to grow things. I want people to join us because they want to grow things.” Immelt went on to describe the kind of person that G.E. seeks to employ. “We need people that know what it feels like to pick up on external trends, who constantly have their antenna up, ready to learn. We need people that are determined and decisive. We need people who have imagination. We need people who know how to be inclusive and engag.e. partners and suppliers. We need people who can learn and teach. We need people that are passionate but still have process.” “This isn’t just important at G.E., or even Cornell,” Immelt added. “This is a societal issue, the need to be innovative.” In 2003, the Financial Times named Immelt “Man of the Year,” for moving the company forward after the economic downturn following Sept. 11. G.E. is 126 years old with 300,000 employees, and is the only company that appeared on the original Dow-Jones Industrial Averag.e. in 1896 that still appears on it today. “The lecture was a great fusion of everything that Cornell is, bringing tog.e.ther learning, education and the real world for a better future,” said Vasilios Roussos grad. “I think that his emphasis on people, his emphasis on being fair with his employees and the customers he interacts with, is critical to the success of the company,” commented Larry Newman, executive director of systems engineering at Cornell. Immelt succeeded Jack Welch in 2001 as CEO of the world’s most profitable industrial company. The Hatfield lecture is an annual event initially sponsored in 1980 by the Continental Group Foundation to honor Robert Hatfield, then retiring chair, president and CEO of the company. This year, the Johnson School and Cornell University are celebrating the 20th anniversary of the naming of the business school.Archived article by Maya Rao Sun Staff Writer