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World After COVID-19: Peter Tufano, Saïd Business School

It’s About Winning the War and Winning the Peace

Peter Tufano is Peter Moores Dean and Professor of Finance at Saïd Business School at the University of Oxford. In conversation with Soumitra Dutta and Dan LeClair of GBSN, he discusses how lessons from World War II can aid government, business, and the education sector to win the war against COVID-19, and win the peace in a post-COVID world. The interview took place 10 weeks after COVID-19 was declared a pandemic by the World Health Organization. This is an edited transcript of their exchange. 

More interviews from The World After COVID-19 Series

Highlights from this interview:
  • While not assured based on previous experience, there is a strong chance COVID-19 will lead to meaningful change.
  • Recent business commitments to stakeholder capitalism will be tested by the economic crisis associated with COVID-19.
  • Although growth in online education is accelerating, the future blends it with face-to-face education because there is value in the experience that goes beyond knowledge transmission.
  • Interconnectedness highlighted by the crisis, demonstrates the need for a systems approach to curricula.
  • To win the peace as we did in WWII, we must focus on generating global prosperity and not only household and national prosperity.
  • Business schools must join forces to address the most importance problems of society, yet we are still working separately in the current crisis.

Dan LeClair: The question we’d like to start with is a very broad one. Do you see this, what’s happening right now with COVID-19, as a turning point?

Peter Tufano: Everybody always thinks that the world is going to change dramatically. If you think back to 1999 and 2000, the digital revolution was going to change the world dramatically. It didn’t–at first. But then it did. And then there was the financial crisis. The world was going to change dramatically. And then it simply didn’t.

This period is probably, at least in my professional lifetime, the most profound in terms of its potential for fostering change. If any world event will change business and society in a material way, I think this pandemic cum economic crisis cum political crisis has the chance to do that. The probabilities are higher that Covid will lead to meaningful change than any other systemic issue that we faced. Not higher than any systemic issue we may face, including climate change.  However, this crisis has come on with such rapidity that perhaps it will give rise to a change in collective consciousness that will lead to lasting change.

Soumitra Dutta: What changes do you foresee the various dimensions of government, business and society?

Tufano: Let’s start with business, because that’s what business educators study. Several months ago in the US, a number of companies signed the Business Roundtable statement. A few months later the Davos Manifesto was penned. In both cases, business leaders professed undying support for stakeholder capitalism and purpose. At an event in January, I simply presciently asked the question, “What happens when markets turn down and things get bad. How committed will we be to purpose?

Are we going to see a retrenchment to business as normal, or will we see something that’s dramatically different and a real commitment to stakeholders broadly?  We are seeing this in large and small ways, how firms treat workers, how they preference dividend payments over other uses of corporate cash.  I hope that this pandemic and the associated economic crisis will lead us to really commit to serving all stakeholders including customers, employees, suppliers, and the environment and communities.

An interesting bellwether is the dividend question. Right now, US corporate dividends are about half a trillion dollars a year and there is a lot of hand wringing about whether companies should cut their dividends. In a stakeholder capitalism world, I think you would ask the question, who amongst our stakeholders needs these resources most? Should we invest in our employees? Should we invest in our customers? Should we continue to hold fast to paying our shareholders the same amount of money we’ve always paid them? I think it’s going be an interesting case study or test. So on the business side I think we’re going to find out whether or not this commitment to stakeholder capitalism is real.

On the government side, I think this crisis is demonstrating the cracks in international systems. Multi-lateralism is being strained dramatically. I’d like to say that we will come out of this in much the same way that we came out of World War II. There will be new bonds formed. But if we compare World War I and World War II, the peace in World War I was not a successful peace in that it laid the groundwork for discontent and another war. The peace of World War II was a more successful peace, creating important albeit imperfect organizations, like the UN, to collaborate on global agendas.

“I’m hoping that we focus on winning the peace here, which is not only about finding national and household prosperity, but also global prosperity—a fairer and more just world, which protects the rights of future generations.”

My fear is that we will emerge with a World War I outcome, where we ignore the global prosperity and worry about the national, and we exacerbate our differences.  That will be our choice.

In terms of society. I think that’s interesting, too. If the populace sees governments and businesses as truly caring for their citizens and customers and employees, people’s trust in business and government will go up. If they see that they’re being abandoned, it will go down. I don’t know which way it will go, but it’s hard to think we will be let out of our lockdowns and everything will just seem normal again.

Dutta: After World War II, there was clear global leadership, and global mechanisms to coordinate. Today. that seems missing both globally and also the European level. I’m curious to know how you see globalization going forward.

Tufano: I guess it depends in part on your time frame. in the next 12 months, do I see a strengthening of multilateral organizations? No. Over the next two or three election cycles, might that be possible when different leaders take control in different countries. I think there is the possibility—and that is our best hope for a better future. The problem is, what should have been the big impetus for collaboration, which is to see a successful collaborative attack against Covid-19 being led across multiple countries, has largely been a lost cause, with nations competing and acting unilaterally.

Dutta: What about the rise of Asia? It’s been happening for some time. Do you think China’s role and Asia’s role will be accelerated on the global stage, and what implications will that have for the way we see the world evolving?

Tufano: I think we’ve already seen it happen. We will continue to see it happen. And I don’t think that trend is going to materially change. It’s partially a function of economics and partially a function of purchasing power, as well as soft power. Of course, China and Asia’s role has become more important. Important in what? Important in global trade, absolutely. And supply chains, yes. Will there be attempts to lessen the dependence, for example in the US, on those supply chains? I think so under the current administration.

How will that play out? That is an interesting question. There was a time when it looked like, when TPP was still a possibility, a multilateral approach was realistic, not just about trade but also around environmental issues, social issues, and more. I’m not seeing that in the cards for the short term; but perhaps over the long term.

LeClair: We touched on business and on society. How about higher education and business education, how do you see it changing?

Tufano: All the pundits are saying, we’re all online now and therefore, we are never going to go back to face-to-face. I don’t think that’s true at all. At least my students, and I think most students, are acknowledging that the experience that they have is far more than the transmission of knowledge.

There was a paper, I don’t know if it’s a good paper, reported in the Times of London today. At least in terms of micro measures, like performance on exams, the authors didn’t see any difference between students who studied in person and online. But, I think that education is far more than that. Are we all much more comfortable with online? Sure. Will we be much more comfortable with blended approaches? Yes.

On the positive side, I hope this reminds people about the value of expertise. The new vaccines being developed at the Jenner Lab at Oxford and rapidly-deployable ventilators of Oxvent are not coming out of random people anywhere in the world. They are the product of decades of science. I’d like to think that there will also be a recognition that there are insights to be gained from scientific work that we do in business schools. I hope we arrest, to some degree, the kind of anti-education approach that some have taken.

Maybe I can digress and use the wartime analogy again for a moment. In the middle of World War II, at least temporarily, four or five things happened. One, business schools became more purposeful. Two, they used that period to change the students they admitted, the way they taught, and what they taught. They tolerated, for a short period of time, different leadership styles. And basically, by adopting a whatever-it-takes approach, they liberated themselves from certain types of tradition. If, like in that 70-year ago period, this gives rise to a burst of innovation in education, not only pedagogy and what is online versus in person, but also in content, I think that would be a really healthy outcome.

We’ve been focusing on systems for the last eight years at the school. We have to understand how systems work, how they are interconnected, how to strategically intervene in specific points, and more. We’ve been saying that is a big deal at Oxford for a long, long time, and putting it in our core curriculum. If anything proves that this approach is important, it is what we’re going through right now. A pandemic is not just a pandemic. It’s not just a health problem. It’s also an economic problem, and a humanitarian problem and a political issue and a social problem.

“I hope this crisis will encourage others, not just the business school but also other parts of academia, to realize that everything we study tends to be interconnected, especially under stress.”

I’m an eternal optimist and I think that it will lead to, at least with our best selves, greater innovation in content and pedagogy. And, if that is combined with a greater appreciation for the power of science and evidence, that would be great.

Dutta: For business leaders and for business school deans like yourself, what do you think are two or three question they should be asking themselves at this point as a look at the future?

Tufano: Let’s not get to the future yet. There are three things we have to do. The first is health and safety. We all had health and safety reports that we ignored, because it was the last thing that we worried about. Health and safety has become paramount.  This was first manifested in how we went to working from home and teaching online.  A far more complicated health and safety issue is how and when we return to physical campuses. Secondly, how do you do our jobs as educators effectively in a context where a lot of our teaching is online. And third, and what’s most important, what’s your purpose and how are you making sure that you are moving forward on your mission? For me, and I hope for others, beyond the emergency, we should be asking, why are we here, and what gives us the license to operate in society?  And therefore, rather than being driven by external metrics like rankings and other traditional measures, what do we really have to do to justify our place in society? And if we all ask that question, then I think we might come up with some very interesting answers. In fairness, that question is really hard to ask in the middle of an emergency when you are dealing with day-to-day issues that are boiling over. But it has to be asked.

Today we had a school board meeting. That’s our governance mechanism. And I started it around mission and innovation because I knew that most of the meeting would deal with issues around the current shuttering of executive education, major questions around what would happen to the class next year, applications, yield, etc. All those urgent topics will drown out subtle issues around mission and innovation. So I started with a discussion of mission and innovation. I’m hoping that when we all get a chance to take a breath, that will be the thing that people who run educational institutions will be focusing on. Because this crisis will give us the license to do some things differently if we want to stay relevant.

Dutta: Do you see society coming together more as a result of this forced isolation at home, or do you see society going apart?

Tufano: There was data released over the last five to eight years that showed that global inequality was reducing, but the within country inequality was increasing. In the same way, we need to differentiate between local and global connections. My initial hunch was that what we’re seeing in a localized way is more “fellow feeling” than before. That’s an expression used by Adam Smith and also by our Queen.  However, as I look at the gaps opening up in the US as the country thinks about opening up, I am less hopeful. And even if we have greater appreciation for our close neighbors, I’m not sure that’s translating into global fellow feeling, which is about coming together globally. So we are reaching out to a lot more people that we haven’t talked to in a long time, and those local thin bonds of social capital may be getting a little bit thicker. That’s a good thing, but it’s local. Are we building the more distant bonds?  That’s a lot trickier question.

LeClair: We’ve covered a lot of territory. In the remaining time, what is one question you wish we would have asked?

Tufano: Maybe it’s not a question but an observation. In our sector, business education, we have largely acted as if we’re all competitors. That’s not to say that what you’re doing and what EQUIS does and what AACSB does isn’t helpful. Of course, academics always share as part of a global community. The scientific community is coming together right now in the biggest moonshot projects that have ever been seen, to try to increase the speed of vaccine development by a factor of 10. Usually a vaccine takes 25 years to develop and they’re trying to do it in 25 months or less. The scientists are coming together to think about moon shots.  But we, in business schools, are still working separately.

Why is that, and what can we do about that? I had proposed to some of my colleagues at other schools before all this, that we needed to work together on questions around climate and there was a lot of slow walking on that conversation. I think we’ve got to do the same thing here. We’re working across, for example, the Creative Destruction Lab network on a programme called CDL Recovery [to rapidly transform technological innovations into useful products and services that address public health and economic recovery challenges created by the global COVID-19 crisis]. We are part of a group of seven schools. But if the elite business schools of the world want to demonstrate that we in fact do have something special to add to the world, we’re not going to do that by all doing our own thing. We’re all doing our own webinars and seminars—which are great—and we’re all asking, as we should, for support from our alumni for our students who are going to find it hard to get jobs.  But, we are not joining forces.

We’re part of the GNAM network. We’re part of a bunch of different networks, but I think realistically right now, people in my role largely have their heads down, because we’re only a few weeks into this crisis. I think the expression on a plane is, put your own mask on before you help others. And I think that’s largely what we’re trying to do. I think Oxford Säid is in a good place, because we’ve got a great team. Our mask is largely on, so I’m starting to think about who else we need to work with in order to support recovery.

We have a common enemy and that is this pandemic. The UK has created a common hero, and that is the NHS. The public service ads say “stay home, save lives, protect the NHS.” That’s the slogan.

“When we come out of this, another common hero will be our medical colleagues who are playing a big role in the first crisis–which is the health crisis. My hope is that business schools are also seen as playing a major role in helping address the second aspect of the crisis, which is the economic crisis.”

That we can be proud of our joint contribution to addressing issues of global prosperity and justice.  That’s my hope, that we will have made a contribution to the world that is bigger than what any one of us could have done alone.

This interview was conducted by Soumitra Dutta, Chairman, and Dan LeClair, CEO of GBSN. This edited transcript was prepared by Shefali Rai.