We caught an interesting video recently where Doug Oberhelman, CEO of Fortune 100 company Caterpillar Inc., was interviewed by Duke Fuqua’s Dean Boulding. The whole thing is an hour long and it’s worth listening to in its entirety, however if you don’t have an hour to sit down and do that right now, then at least read through this post. We’re going to call out one segment specifically where Mr. Oberhelman talks about business cycles and specifically the question of growth. You may recall that we mentioned growth in the context of a discussion around Kellogg’s focus, and so we thought this might also be interesting and useful to hear. The relevant comments start at 21:43 into the conversation and we’ve embedded the video to start exactly there:
Here’s a quick synopsis:
Dean Boulding mentioned that Oberhelman was appointed to CEO in 2010, and things have been rocky for Caterpillar in that time. Oberhelman then gave a recap of revenue history for the past ten years which is a shorthand way of discussing the business cycle: high revenue levels for the company in 2004; 2008; 2011; 2012; and projected in 2016.
He then tells a story about living through earlier recessions, including 1981 when he was in Uruguay and the petroleum market crashed, oil was $35/barrel. “I watched countries go bankrupt, companies go bankrupt, families lose everything in that period of time, but you learned how to survive, how to thrive and do things, manage your balance sheet.”
“The world is still adjusting to the collapse in the oil markets in 2012… We’re suffering with 2.5% GDP growth. Very slow growth. You don’t add people, you don’t spend money, it’s very difficult to see growth with 2.5%. The world needs 3 to 4 [percent GDP growth] to really add jobs. We haven’t seen that since really ’07, ’06, and that really is the core of this.”
So, “growth” as a concept certainly sounds sexy, and like we said in those comments about Kellogg’s focus, it’s applicable in certain companies and certain economic environments. Every CEO dreams about growth. But there are limiting factors.
Listening to top execs at major corporations talk about the economic climate is often a great way to gauge where things may be going. If you’re interested in a career on Wall Street then you (hopefully) already know this, since that’s a huge input affecting stock prices. The quarterly earnings calls are very scripted at most companies but they also let you get a glimpse into how companies are thinking about the current and near-term realities. So whenever a bschool is hosting one of these forums, they’re very often worth watching, and we’re pleased to see more and more schools posting them on YouTube. Duke does it frequently and we have seen some great ones from Berkeley Haas with Dean Lyons Speaker Series too. If you’re currently feeling like you’re in an in-between time on your bschool planning and you don’t know what you should be focusing on, well, focusing on the state of the economy and how businesses are dealing with today’s environment is not a bad thing to pursue.
If anyone out there knows of similar interviews with key executives that offered useful insights or helpful explanations to where the business world is at, feel free to share them in the comments.