HHL Graduation September 1, 2012 Living up to individual responsibility - what you should bear in mind before starting out in your career Commencement Address by Rainer Neske Member of the Management Board of Deutsche Bank AG Check against delivery
Thank you, Professor Pinkwart! First of all, I would like to thank you, Professor Pinkwart, for inviting me to speak at this year s Graduation Ceremony at HHL. Deutsche Bank and the Leipzig Graduate School of Management have enjoyed an excellent relationship for many years. Not only because we are one of HHL s supporters, but also because of the close personal ties with you, Professor Pinkwart, as a member of Deutsche Bank s Regional Advisory Council. Dean, Your Excellencies, Members of the Parliament, Esteemed Members of the Faculties and Professors, Ladies and Gentlemen, Last but certainly not least: Dear HHL Graduates, It is a great honour for me to speak to you on such an important occasion in your lives. Today you are graduating from HHL. In looking back over the course of your studies, you will certainly have attended some entertaining and possibly some very long and exhausting lectures and seminars, completed internships in Germany and abroad, studied hard for your exams, 2
waited anxiously for the results, and I m quite sure: you have been out to a lot of great and wild parties (some that you may not remember all too well, or want to be reminded of...). In other words: you have fulfilled the requirements for an excellent education! Sitting here now, with your parents, professors, family and friends, you have every reason to be proud of yourselves! You have made it! This is your day. We are here to honour you. And this is something you have worked hard for! I am sure that I can speak for everyone when I say: We admire what you have achieved. And I would like to extend my congratulations to each and every one of you! While preparing for this speech I thought back to the time when I left university. Back then, such things were normally not celebrated together publicly like they are today. In fact, I found my graduate diploma from the University of Karlsruhe in the letterbox. In looking back now, I think: what a pity especially, considering this wonderful celebration here today. On the other hand, I personally find nothing more exhausting than long speeches on such occasions, so I promise to do my best to keep mine short. I left university in 1990. While I was studying for my exams in Information Technology in my tiny student apartment, events were taking place in the world outside that nobody could ever have imagined. The Berlin Wall had fallen only months earlier. The Montagsdemonstrationen here in Leipzig led the way to the fall of the Berlin Wall, the reunification of Germany and the end of the Cold War. In just under a year, not only Germany, but the entire world had changed forever. Now, 22 years later, 3
these historical changes may seem to be the clear result of a logical series of events. But that was not how it was seen back then. On the morning of November 8, 1989, no one could possibly have imagined what would happen over the next 24 hours and how these few hours would change the world forever. And no one could have known for sure that this historic change would take place the peaceful way that, thank heavens, it actually did. We saw first hand just how unpredictable historical developments can be. And we also experienced the positive force that unpredictability can have. The results are visible here and now: more than 100 young people from 16 different countries are receiving their Master of Science, MBA or doctoral degree from a private university in Leipzig and a member of Deutsche Bank s Management Board is giving the keynote address. The irony of history! In 20 years from now, one of you may be up here giving the keynote address for HHL. And maybe you, too, will refer to the year you graduated. Just as I have spoken about the events leading to the end of the Cold War, you may be speaking about the developments in 2012: You could mention: a severe financial market and sovereign debt crisis, people who are concerned about their savings, fears of a disintegration of the euro, and even that the European project will come to an end, and a continent that is desperately looking for a way out of the crisis, while in the middle of its own identity crisis and while questioning its future role among world powers. 4
I admit the prospects as a graduate in 1990 appeared to be more favourable than they do for you today. Back then despite uncertainty about the future we all shared a spirit of optimism. The free world had triumphed over communism. It seemed that capitalism had finally proven to be the superior system. And today? History is once again proving its capacity to create ironic situations. Now, capitalism is going through an existential crisis. More and more people, including many in the well-educated middle class or as we say in Germany Bürgertum, mistrust the forces of the free market. They are calling for a strong state to enforce order in the economy. And, above all, they mistrust the industry responsible for maintaining the lifeblood of the market economy: Us. The banks. Let me say a few words on this topic, which so many people are concerned about. And I think you might have been expecting me to comment on some of the criticism of the banking business. Just like in any other sector of business, a few people can destroy the reputation of everyone else. The hundreds of thousands of men and women working in the banking industry are currently going through this bitter experience. In fact, the first ones to hear about every major or minor scandal in the financial sector are the people at the counters of bank branches from their customers. Many feel they are being unjustly treated. And they are right. Most bankers carry out their jobs responsibly and to customers satisfaction. All of the surveys we regularly conduct confirm this. And the vast majority of bank staff earn salaries roughly the same as employees in other sectors. This applies to all of Germany s and Europe s banks. With that in mind, I don t think it is right to blame an entire group of workers without any differentiation. But I also don t think it is right to reject every criticism of our industry as unjustified or to point fingers at 5
others. The financial services industry did make major mistakes in the years leading up to the crisis: In many cases, the banking sector lost sight of its customers and concentrated on pursuing its own advantages. Our sector invented financial instruments that had no connection to the real economy and were often designed primarily to maximize short-term profits. Many banks took on risks that jeopardized their own existence in many cases, at the taxpayers expense. By the way, this included I must say a large number of German state-run Landesbanken... There were in fact great differences in the way banks and individual bankers conducted their business. However, the results are obvious: all banks lost a lot of trust. They now have to find a new place, a new role for themselves, not only in the world of business but also in society as a whole. It s a process that will take an entire generation of bankers. I encourage you to become part of this endeavour. Just think, with a career in banking, you can contribute, so to speak, to building a new banking system. This is an important and exciting task! However, it is not just banks that people mistrust. A lot of them mistrust our entire economic and political system, and ultimately: our democracy. People have serious doubts that markets and ethics are compatible. They no longer feel that our society is fair. According to recent surveys, half of the people in Germany are dissatisfied with our economic system and believe it needs to be fundamentally reformed. And around twothirds of the people surveyed in Germany say that the social market economy no longer functions as well as it did. Furthermore, Europe is in 6
the middle of a severe crisis. Not only is our currency in danger, but many even fear that the entire project of peace in Europe is now being questioned. Old national resentments are coming back again. The trust built up between Europeans over decades seems to be disappearing even among heads of state and government. Ladies and gentlemen, these are dramatic findings! Although the problems we are facing are urgent with problems ranging from the social divide between rich and poor to the challenges ahead in Europe s future this speech is not intended to identify ways out of the crisis. Of course, that would be taking on too much. I would like to answer a different question today: how can you as business managers just starting out in your careers, as society s future elite how can you contribute to solving such problems and to shaping the future? I would like to give three pieces of advice to you personally, and then comment on three issues we should consider as a society. Let me start with my three pieces of personal advice for you before you start out on your career. First of all, don t despair! Don t listen to the prophets of doom! Of course, every more or less normal person is afraid of the end of the world. However, despite all of the past predictions, it hasn t happened yet. When I was growing up the Club of Rome was highly concerned about the limits to growth. Others expected forests to die or oil to run out within a couple of years. Fear is a bad advisor. At best, it leads to paralysis. At worst, it leads to irrational decisions. 7
Secondly: Just like the predictions of doom and gloom, you shouldn t rely on today s Zeitgeist. As the saying goes, The man who marries the spirit of the age will soon be a widower. Do not follow trends blindly. Question the opinions of others. The more people there are who share the same opinion, the more questions you should be asking! Ask the simple questions, too, as they are often the smart ones that go straight to the heart of the matter. I firmly believe that we would have been spared a lot of trouble if more people had asked simple questions in the pre-crisis years. Form your own opinions and stand by them. Don t be afraid to make mistakes. And don t be afraid to say No from time to time. Thirdly: You should never stop expanding your horizons intellectually. Learn about subjects outside of your area of specialization. Find something to balance out the demands of your career, be it sports, music, literature, philosophy or art and, of course, time with your family. Good managers have to master more than just the tools of their trade. They need a well-rounded education and an ethical compass to guide them through the world of business. A steady ethical compass cannot be replaced by even the best compliance rules, as they are only intended to ensure that employees comply with laws and regulations. There is also a second dimension to expanding one s intellectual horizons: talking and listening to others. I have the feeling that the members of Europe s elite are no longer capable of engaging in a constructive dialogue with each other. All too often, there is simply a lack of a shared language, and I 8
don t mean English or German here, but the different worlds they live in, because they are thinking in silos. However, good managers must be able to build bridges and hold discussions with people who work in a broad range of different fields. This applies above all to the dialogue between politics and business, too. The ability to engage in such an interdisciplinary dialogue is now urgently needed. All of you have an international background for precisely this task. You speak several languages and have already gained an understanding for other cultures during your education. Put your intercultural skills to good use! The challenges of the future can or at least should no longer be solved only at the national level, but on a European or global scale. With the wealth of your experience, you have the best qualifications to take over responsibility and to work on finding a consensus on sustainable solutions. Ladies and Gentlemen, as I mentioned earlier: In addition to my 3 pieces of personal advice, I would also like to mention 3 important lessons from the mistakes we ve made as a society over the past 10 to 15 years, although of course, you could add many more. First of all: We need to return to a culture of moderation. This applies to individual areas such as state finances and managers compensation. But it is just as relevant to us as a society as a whole. Please don t get me wrong: I am not someone who doubts the benefits of growth. Without economic growth, we would not be able to maintain our standard of living or finance our social security systems against the background of today s demographic developments. I am also a great fan of innovation! I m glad to see every new processor that increases the speed of my ipad. And I m excited about every new technology that makes cars even safer. 9
However, we have to make sure that we don t immoderately accelerate our lives and that we don t overtax ourselves. Let me mention a few examples: As the father of three children, I doubt if it makes real sense to rush young people through secondary schools (Gymnasien in Germany) and universities as quickly and efficiently as possible instead of giving them time to focus more intensively on a number of subjects in a interdisciplinary manner. (Of course, this is not a justification for long-term students moderation applies in both directions...) As a member of the Management Board of a large global corporation, I doubt if it makes real sense for a company s overall business strategy to be re-evaluated by the media and by analysts every three months on the basis of quarterly figures. As a member of society, I doubt if it makes real sense to permanently evaluate political decisions based on opinion polls and then to call them into question again or, what is just as bad in a representative democracy, to have political decisions endorsed by surveys of public opinion in advance. The demand to see quick wins is not very compatible with the need to take long-term business and political decisions. We may probably never be able to reverse the trend here, but we have to try to free ourselves from such pressures and establish a new level of constancy in our actions. A culture of moderation and constancy should apply in a special way to managers. You should always keep in mind that the way you think and act has a direct influence on the people around you, on your own company and ultimately on the overall society we live in. 10
Secondly: We must not forget solidarity solidarity at a personal level with other individuals as well as within our society overall. Like no other company, Deutsche Bank stands for a culture of performance. Our objective is to recruit the best people and motivate them to achieve a top performance. I am a great supporter of this culture. It has made Deutsche Bank strong for decades, and at the very least it is the reason why we are now Germany s only bank of world-class stature. If we want to have innovation, and if we want to make the world a better place, we need elites in all areas of our society in companies as well as in politics, in sports as well as in academic research and in society s cultural life. Starting from today, you are definitely a member of the elite! But as one of the elite, you should always keep in mind that a top performance entails treating others in an ethically and morally correct manner. A top performance also means not leaving the weaker behind; it means accepting responsibility for them and integrating them into a team. In fact, today s weaknesses can sometimes be tomorrow s strengths. And almost everybody has skills he or she can put to good use for a team. This applies in your own company but also to society as a whole. No one is immune to the risk of losing touch with reality and it doesn t matter what industry you work in. As your salary rises, and naturally I hope it does in your careers!, you should never forget what life is like for an average earner. You should keep track of the people working several hierarchy levels under you or who are simply in a worse situation than you are. This applies especially to the people directly around you in your company and in your private life. The third lesson to learn from past mistakes is that we have to return to the basic values of our free and social market economy. Our economic system is also a system of values, with both material and social 11
dimensions, that are ideally in balance. And our free, social market economy is worth preserving, not only from too much influence by the state, which definitely does not perform any better than individual citizens. When the state does try, it always winds up overextending itself. But our social market economy is also worth safeguarding against other economic and value systems. I firmly believe that we ll have a lot more success doing this together as Europeans than on our own. When it comes to setting out rules and values at the global level, only a united Europe will have a strong voice in the future, too. I would like to call upon those of you who are Europeans: Promote the interests of Europe! Become politically involved for your continent, for your home. And I would like to ask those of you who have come to Leipzig from other parts of the world: Become ambassadors for Europe! I hope you have found plenty of reasons during your studies here to do so. Dear Graduates, I m sure of one of you will be standing here in 20 or 25 years time from now. Although we don t know who it will be, we can be certain that the world will be completely different from how we now expect it to be. And we can be certain of another thing: it will be a world and a society that every one of you will have helped to build each in your own way. Now, you shouldn t feel the weight of the world on your shoulders especially on this great day. I believe the feeling you probably have today is similar to how you felt when you left your final exams at school: Freedom! And it s a feeling you should enjoy! Despite all of the difficulties we are currently facing, you have many good reasons to remain optimistic. Look at problems as challenges, and challenges as opportunities. Always be prepared for surprises. Already tomorrow, the 12
world could be entirely different from today. If you always remain curious and open to new things and act on a clear set of solid values, you are well prepared for everything the future holds in store for you. So now: Enjoy the celebration with your families, friends, fellow students and professors. You have earned it, along with our respect. Congratulations and thank you very much! 13