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Where Growth Will Come From



  • Christine Poon, vice chairman at Johnson & Johnson, who says J&J has 17 new meds in advanced stages of testing. Hey, Big Pharma, what is she doing that you’re missing?


  • Gary Bettman, commissioner of the NHL, who let greed force the cancellation of an entire season and impede an ESPN TV deal. The game on the rink has been pushed to the brink€¦quot;somebody call out the Zamboni.

Where Growth Will Come From
of more than 9,300 top business leaders by McKinsey revealed that more of them expect to achieve sales growth in the U.S. than China over the next five years. Furthermore, those two countries stand head and shoulders above any others in terms of sales growth opportunities over the same time frame.

The survey, taken in March, included chief executives and other top officers from many industries such as information technology and telecom, business services and finance. They were allowed to choose just one country.

McKinsey says smaller American companies tend to see faster growth in the U.S., but larger U.S. companies see faster growth in China. Of the respondents from companies with revenues of less than $250 million, 30 percent chose the U.S. But 41 percent of companies with more than $5 billion in revenues picked China.

Another part of the explanation for why respondents picked the U.S. as their biggest sales target was that non-American companies expect to expand here. “Chinese and Indian companies are the ones that actually said the United States was going to be their biggest growth market,” says Lenny Mendonca, a director at McKinsey who helped conduct the survey. “A lot of the big American companies said China or India.”

It is hardly surprising that Europe fared so poorly in view of its perennially slow growth and overall Euro malaise. But it is noteworthy that Britain came in third. “It’s a relatively open country,” says Mendonca. “It was on the list for Indian companies.”

And which industry do business leaders see as offering the highest growth rates in the entire global economy? Health care and pharmaceutical, reflecting the aging of populations throughout the industrialized world.



  • Paul Otellini. What a coup in winning big business from Apple! That’s a huge first win for a new CEO. Why, it’s downright Grovesque.


  • Dan Brewster, former CEO of Gruner + Jahr’s American magazine empire. Your ham-handed vanity acquisitions led to fire sales after you’d left the scene of the crime. Wanna buy some swampland, buddy?

CEOs Pick Business Schools
the respondents to our most recent email polling have used business schools to educate or train themselves, their top managers or their board members. But they disagree sharply about which B-schools are best-suited for that purpose.

Some 259 out of 477 respondents, or 54.3 percent, said they had used business schools in one of those ways (see story, page 34). Presented with Business Week’s top 25 business schools, they chose the 10 best for CEOs to use (below left). But they also nominated a sampling of a surprising array of other business schools, which we’ve listed (below, center).

Respondents noted it is difficult to compare business schools because they have such different strengths. “Darden is more real world and hands-on with participation by top industry leaders such as George David of United Technologies,” one reader wrote. “MIT is the choice of many for manufacturing and is also highly practical. Harvard still ranks high, but it is overrated.”

Harvard does seem to be a lightning rod, with other CEOs defending it vigorously. “Harvard still has the strongest brand among all business schools, and it has the best senior executive level programs,” one reader stated.

As to why so many CEOs have never used a business school, it may be frustration with what is taught. “Business schools teach their students how to think and how to plan and creatively analyze problems,” one reader wrote. “But they do not teach them how to manage people, how to mentor or be mentored, or how to deal with the frustrations inherent in following someone else’s directives. I wouldn’t hire an MBA if the government gave me a 100 percent subsidy.”

Another reader added: “The gap between real-world business needs and the curricula at these branded business schools continues to widen at a frightening pace.”

In other news, CEO Confidence bumped up this month after a decline the previous month (below right). The benchmark indicator, launched in October 2002 with a base value of 100, hit 165, up from 146.8 the previous month. That was largely driven by a 19.8 point increase in the Employment Confidence Index, a key component. The sharp month-to-month fluctuations mean it is difficult to tell whether the increase in hiring intentions is a short-term blip or a meaningful long-term trend.


Cox: Can he take the heat?
Chief executives crave some regulatory relief, but Cox has to thrive in a nasty political environment in order to deliver.
By Peter Galuszka

Two years of tough enforcement at the U.S. Securities and Exchange Commission appear to be headed toward less bumptious and more business-friendly times with the nomination of U.S. Rep. Christopher Cox as SEC chief. President Bush nominated Cox, a 52-year-old conservative Republican from southern California, after SEC chairman William H. Donaldson abruptly resigned.

Donaldson, 74, surprised many chief executives with his unexpectedly tough stances. Although a Republican, he often backed the SEC regulatory staff on controversial interpretations and enforcement issues and sometimes sided with the two Democrats on the board.

Cox, by contrast, has a long history of working on pro-business legislation. He was instrumental in a 1995 bill that would have limited the rights of shareholders to file class action lawsuits because a company’s stock tanked. The bill, which would have raised the burdens of proof for alleged fraud by shareholders, was modified and passed despite a veto by former President Bill Clinton.

Cox, who voted in favor of the Sarbanes-Oxley Act, is also the first politician, rather than financial expert, in recent memory to be nominated for the top seat at the SEC. If approved, two of Cox’s first challenges will be how to handle a recommendation by the Financial Standards Accounting Board that stock options be listed as expenses, and how to toughen SEC oversight of hedge funds.

“He’s a very thoughtful guy,” says Stuart Kaswell, a partner in the financial service group at Dechert LLP. Kaswell, a former general counsel for the Securities Industry Association, worked with Cox on the bill limiting shareholder lawsuits. “He understands the importance of securities legislation and legislation on financial markets. He has a lot of experience on the economy on the Hill.”

But most observers believe the role will be difficult because he must build on the integrity Donaldson instilled while charting a course for less stifling regulatory oversight of business. Whether he’s right for the job remains open to debate, and how he comports himself during the confirmation process should be quite interesting.

Kaswell believes Cox has the right stuff to receive confirmation and navigate any subsequent scrutiny thereafter. “There was a lot of questioning and crazy rhetoric that the bill would slam the door on all future shareholder lawsuits,” he says, citing Cox’s tough stance in the face of enormous pressure from the House Commerce Committee while preparing his shareholder bill back in 1995. “That proved to be nonsense, and Cox held his ground.”

But Cox has been less steely when more personal issues were at stake, and it remains to be seen how he’ll react when€¦quot;and if€¦quot;things get ugly. While seeking a bench appointment to the U.S. Court of Appeals back in 2001, Cox withdrew his name when it became apparent his confirmation would face opposition from Democrats. Given the recent flood of congressional filibusters surrounding recent presidential nominations, Cox’s intestinal fortitude may be put to the test before he even takes office.


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