David Komansky, chairman and CEO of Merrill Lynch & Co., finds it ironic that the head of a financial services firm gets asked to lecture on the new economy these days.
“Our company has been called ‘ a relic from the Cro-Magnon era’ ,” he said. “But because of the patterns that started in the last year, some of the virtues of the old economy companies have now become more accepted.”
Komansky, who met with students at Wharton last month as part of the Zweig Speaker Series, had some interesting advice to offer his audience, including this: There is no time like bad economic times to start a business career.
“Bad times breed opportunities. Those who don’ t have the courage to drive hard in bad times fall by the wayside,” Komansky said, noting that he is not quite sure an economic downturn is coming in any case.
“But I would not hesitate to come into the financial services business in bad times … This business gives extraordinary people a chance to do extraordinary things.”
At the same time, Komansky pointed to the arrival of a “new age” for business: “Globalization, deregulation and advanced technology will continue to make businesses both larger and more nimble, national borders have become irrelevant and learning to function all around the world is now a fundamental part of the financial services business.”
And despite the dot-com shakeout, there is no denying the effects of technology. “Strangely, technology may have affected our business more than any other,” said Komansky. “The best-selling product on the Internet is not music, not toys, not flowers or gifts, but stock.”
What this all means, he added, is that to be successful in the new economy, you need a blend of old and new economy virtues. In recognition of this, Komansky proceeded to offer his audience a list of five paradoxes of the new economy.
First, he said, scale is just as important as innovation. “In the business press over the last few years, it was always reported that the small companies could be more innovative, that to be creative, you had to be small and flexible,” he said. “But I feel that if you want to take these ideas and do something about them, you need scale and resources. Before long, only a handful of global players will be able to bring these new ideas to all markets,” he said. “Frankly, we welcome that and want to be a part of it.”
The second paradox is that in a world of endless choices, brand matters. Despite all the new Internet companies out there, only a few, like Amazon, have become household names. “I’ ve heard it said that if you took away all the products from Coca-Cola and left the managers with the brand name, they could build up the company again in five years,” he said. “But if you took away the brand and left them with the products, they’ d be out of business in those same five years. New or old economy, brand still matters.”