Graduation 2009: Strategic Opportunity

MBA Commencement Ceremony
Keynote Speaker: Kenneth M. Jastrow II
Non-Executive Chairman of Guaranty Financial Services and Forestar Group Inc.

Friday, May 22, 2009   

Thank you Dean Gilligan. I am pleased you are the Dean of the McCombs School. We look forward to your leadership focused on making McCombs one of the most prominent business schools in the world. It is a great honor for me to deliver the commencement address to this outstanding class of MBA graduates from the McCombs Business School.

To begin, I want to offer each graduate my sincere congratulations. Your hard work and dedication now result in your receiving an MBA from one of the great business schools in the U.S. The work you have accomplished here, combined with your distinguished undergraduate education and previous work experience prior to coming to McCombs, now make you ready to pursue a very successful career in business.

However, your adventure to the future begins at a time when the U.S. economy, and indeed, the world economy, is experiencing the most severe economic downturn and worst job market since the Great Depression. Certainly, you have invested money in your graduate education – some of you may have gone into debt – your families may be worried, but you know what you are doing. Fate has presented you with the opportunity of a life time: and my task today is to persuade you that you have chosen a strategic moment to enter the marketplace and offer a few suggestions on how to succeed.

Let me put this opportunity you face into context – U.S. history teaches us that following every period of economic turmoil – especially our most significant market contraction, The Great Depression of the 1930’s, the U.S. experienced significant growth in economic prosperity. In each instance, younger members of the generation have been able to realize the greatest advantage from the recovery in the economy.

We all know the story of The Great Depression of the 1930’s. Economic contraction was so severe that nearly one-fourth of Americans were out of work. Banks failed and demand for products and services deteriorated rapidly causing a deflationary spiral in prices. The Great Depression touched all Americans and for many families, they lost most of their accumulated assets. The depth of the Depression required significant government intervention and today we benefit from many of the programs put in place during the 30’s. However, the real catalyst for recovery was America’s enormous productivity growth required for our participation in World War II. Following the end of the war, America continued to expand productivity and through accelerated investment in education, became the world’s demonstrated leader in new discovery and ingenuity.

The result of this sustained surge in productivity and ingenuity resulted in the great miracle of the U.S. economy – the development of a very large and affluent middle class. Never before has a country experienced this widespread sharing of prosperity and the highest standard of living over such a large class of citizens. The growth of the middle class led to America’s leadership as the greatest economic power in the world.

The lesson of history is clear on who the winners are in times of prosperity following economic downturns– the younger members of a generation because they have a longer time to take advantage of new and developing opportunities and because they are trained and better equipped in new ideas and technology that drive societies advancement and well being. Today times are very troubled – however, the U.S. economy will ultimately experience a significant up-turn – and you have the fullness of your career to take advantage of America’s (and the world’s) return to prosperity.

Let me now offer a few thoughts that hopefully provide some measure of help to navigate through these “choppy waters”:
First:
STAY POSITIVE: The world’s most successful people are optimists. Certainly one must be realistic – however, the pessimist is easy to spot and very seldom is the long-term winner. Take a lesson from the greatest investor of our time, Warren Buffet -- He consistently says the American economy 10 years from now will be bigger and better – and 10 years after that even more so.

Second: WORK HARD AND BE CREATIVE: Use the recession to allow yourself to take calculated risks you might not have in the past. Let me make this point by sharing a story of a graduate of the Law School I interviewed about two years ago. He was having trouble landing a conventional job that would take advantage of his interest in corporate finance and international issues. I recently learned, however, that he now consults for companies such as Disney and Genentech on corporate social responsibility and sustainability. He’s also producing a documentary film about African refugees. And in his spare time, he tours with and advises his friends in the entertainment business. Perhaps you’ve heard of their band – Ghostland Observatory. I suspect this young man is better off than if he were a junior associate laboring in the corporate finance section of a large law firm. And as the last associate hired in a big firm, he might have been the first to be laid off. Instead, he has acquired a diverse set of skills. He’s doing things that he’s passionate about. And he’s having fun in the process.
Simply put: Don’t be reluctant to move out of your comfort zone.

Third: LOCATION MATTERS: Richard Florida in an article for The Atlantic Magazine, “How The Crash Will Reshape America,” said that “the world’s 40 largest mega-regions, which are home to some 18% of the world’s population, produce two-thirds of global economic output and nearly 9 in 10 new patented innovations.” Most of these mega-regions are made up of a system of multiple cities and their surrounding suburbs that are centers of innovation that attract talent. The author Florida observes: “These important mega-regions are places that have the highest velocity of ideas; highest density of talented and creative people; and the highest rate of metabolism.” Fortunately, the Texas Triangle of Houston-San Antonio-Dallas (including Austin) is one of these mega-regions. Of particular importance is our region’s ability to attract highly educated people —human capital — which many believe will be the primary driver of future economic prosperity. You will benefit greatly if you are geographically located where two-thirds of the world’s productive output takes place.

Fourth:BE SELF-SUFFICIENT AND MAINTAIN FLEXIBILITY:
You must have the ability and confidence to rely on yourself. To be sure , advice and council are important and should be solicited; however, you are the decision maker for yourself. Analyze carefully, think long-term and strategically, accept responsibility, live with consequences – but most of all, learn to trust yourself. Also be open and flexible to new opportunities. Make sure you do not have inhibiting factors restricting career advancement.

Fifth:ACT ETHICALLY AND WITH INTEGRITY: Above all else, adopt a moral and ethical compass that will guide all of your decisions and actions for life.

You have a bright future and all of us look forward to your success in business and your evolving leadership of our great country.

Before concluding my remarks, let me touch on what I believe to be one of your generation’s most significant issues – that is, the philosophical direction of the U.S. and the American people. Michael R. Beschloss in his book, Kennedy and Roosevelt, notes that two broad choices have been intently debated by past leaders –
1. “An America dominated by citizens who subordinate their individual ambitions to a more universal conception of the public interest, and;
2. The pragmatic tradition which commanded citizens to follow their own interest, which on a large scale, would ultimately allow the common good to prevail.”

This choice of Public Service vs. Individual Initiative was vigorously debated by the framers of the constitution. The author Beschloss concludes that “ultimately the pragmatic approach of individual initiative won the day and the new constitution sought to promote the general welfare less through appeals for public spirited behavior than by counteracting ambition with ambition.” The constitution therefore recognized limited government intrusion as a virtue and relied on citizens to determine what is best for themselves. Even though pragmatism carried the day, unwritten law has kept alive the more demanding ethnic of citizenship.

Throughout American history, especially during troubled times, the debate re-emerges -- Public Service vs. Individual Initiative. Certainly today there is a renewed emphasis for Americans to serve the public good as the appropriate strategy for our country to survive and ultimately recover from the current economic downturn. In 1937 during the depth of The great Depression, FDR said in his 2nd term inaugural address: “Instinctively we recognized a deeper need—the need to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization.”

So there you have it – The question: What is the best philosophical course for America in the Future: Public Service or Individual Initiative? No nation has achieved America’s economic superiority. Yet, we still have not avoided very troubling economic downturns. The answer to this question may evolve to a mutually inclusive solution. Going forward, we must perfect the concept of individual initiative while at the same time, encourage and secure agreement that we, as a nation, are all in this together.

Thank you, good luck, and Hook’ Em Horns!