Mike Klowden is at his desk by 7 a.m. most mornings, and he feels like he’s getting a late start. The former COO of Jeffries & Co., a securities brokerage and investment banking firm, used to begin his work day at 4 a.m. It’s a habit he finds hard to break, even though he’s not required to punch in quite so early in his current position as president and CEO of The Milken Institute. Founded in 1991, the institute’s core mission is to promote positive global change and social vitality through entrepreneurship, job creation, economic development and increased availability of financial resources. The institute’s scholars provide practical, results-oriented research disseminated in numerous reports and publications, including the highly regarded The Milken Review quarterly, as well as through seminars and forums.
Smart Business talked with Klowden about doing good, the global economy and how leaders can apply forward-looking thinking to their daily operations.
We believe in market-based solutions. By creating jobs and making access to capital more efficient and democratic, private businesses and financial institutions can drive sustainable development that will help solve many of the biggest challenges facing us, from poverty to pollution.
What we call the democratization of capital [making money and financial tools more broadly available to citizens from all segments of society] has the potential to change and improve the quality of life for everyone, everywhere. In this country, it already has. Much progress has been made over the past hundred years, but there is still a great deal to be done, here and abroad.
I am convinced that it is possible to do well by doing good. Of course, there must be a nexus between shareholder interests and everything else a corporation does. And many companies set aside money for charitable contributions. But rather than just giving a dollar — and I’m not saying anything negative about this — businesses can play a much larger role. When there’s a recognition that it’s an interconnected, interdependent world, then trying to do what is right is not at odds with the bottom line. If a company is heavily invested in a region, for example, its future health is directly connected to the regional economy. Strengthening the local community makes good business sense.
The most successful corporations are those that recognize and address long-term issues. That often means taking chances. This is difficult to do when leaders are under pressure to constantly increase earnings. I think the tendency to focus on quarterly earnings is unfortunate because it puts the emphasis on short-term goals.
Human capital, the most important asset of a society or a business, doesn’t show-up on a balance sheet. As we continue to move toward a knowledge-based economy in this country, hard assets become less meaningful. It is people that will make communities and companies thrive. The emphasis should be on new ideas and the development of intellectual property, education and training of the work force, and providing them with continuing opportunities for advancement. The best CEOs have people skills and understand the value of human capital. They work hard to attract talent, and equally hard to foster and nurture it.
The real question for American business is, what’s our comparative advantage? In a global economy, it’s inevitable that some types of jobs will be lost. But if we understand what our national strengths are and make decisions that emphasize those strengths and positively impact them, we can also increase the number of jobs in other sectors.
Today’s CEOs face a real challenge. They must demonstrate not only ability but integrity. All their constituents, inside and outside the corporation, must trust in the quality of their product and their practices, and have confidence in their capacity for leadership. I feel very strongly that everything one does and says as a business leader should be fit to print on the front page of the Wall Street Journal. All companies have their secrets. There’s nothing wrong with that. But every executive should be prepared to have those secrets made public. Although I’m the head of a nonprofit research institute, my job is the same as every other chief executive office. First and foremost, I must keep us true to our mission. It’s also up to me ensure that we have the financial resources we need to achieve the mission. And it is my responsibility to motivate and manage people, so that they do their jobs and help us achieve our goals. That’s really what all leaders should do, isn’t it?
Much of what we’re involved in here at the institute can directly relates to the business community. By monitoring demographic and market trends, tracking developments in emerging industries such biotechnology and showing how to take advantage of innovative financial techniques, we provide real benefits. One of the key areas we focus on is economic opportunity. For example, we’ve studied the impact of the bio- pharmaceutical industry on job creation, analyzing where these companies are most likely to locate and what the multiplier effect of their presence can mean. Another important sector to pay attention to is minority businesses. The Institute coined the term EDM, emerging domestic markets, now widely used to talk about the tremendous potential within minority communities for buyers, sellers and investors. Entrepreneurial capital can make a big difference here.
Another initiative we’re involved in is accelerating the delivery system of medical science to the marketplace. We’re looking at what can be done to facilitate the transformation of research into new treatments and cures for deadly and debilitating illnesses.
We hold a global conference annually that brings business and policy leaders together with some of the best minds of our times, including some Nobel laureates. Last April, 2,400 attended. There were 325 panelists discussing 90 different topics. The feedback we’ve gotten on this gathering and others that we host throughout the year is that those who attend are stimulated and excited. They say we’ve helped them think about the issues that face them in new ways, and that they are highly motivated to apply what they learn.
How to reach: Milken Institute, (310) 570-4600, www.milkeninstitute.org