Peter Lorange
'The strength of Switzerland stems from the fact you have three cultures here.'
Norwegian IMD chief loves lake life
Peter Lorange, born in Norway, is happy today: he’s just heard that IMD, the Lausanne-based business school that he has headed for more than a decade, has been named top international MBA programme by the Wall Street Journal. Usually soft spoken, Lorange, 63, becomes quite animated when talking about the
International Institute for Management Development, or IMD, which is clearly his passion. As he reminds us, many of IMD’s core principles mirror his own, most importantly the need to keep an open mind toward other cultures and beliefs.
Lorange’s career has straddled the Atlantic. After undergraduate studies at home, he obtained business degrees from Yale and Harvard before a long career teaching at Wharton and mit. But the power politics of the United States and the economic nationalism of big European nations make him uncomfortable.
It is Switzerland that has captured his imagination, and he plans to retire here. Although retaining Norwegian citizenship, Lorange is quick to extol the virtues of his adopted country, showing how strongly rooted he has become here.
The interview was conducted by Tom Wright of The New York Times.
The pictures are by Vanessa Püntener.
TW: IMD has been voted best international business school by The Wall Street Journal this year. How much do you think being based in Switzerland helped IMD become a top school?
PL: Our school is an example of the openness of Switzerland. Less than 10 per cent of our students are Swiss. We are a truly international school. There is no doubt that we would never have been as successful as we are if we hadn’t been located in Switzerland. We appreciate Switzerland’s strengths: it is neutral; it is a comfortable place for everyone from all over the world to come; and it is welcoming. Lausanne is a great place for different kinds of people to feel comfortable. They would not necessarily be that comfortable if they were located in a monolithic society like the us, the UK, Germany or France. The very fact Switzerland is culturally neutral in that sense is a tremendous asset. We think that this kind of global meeting place, which plays on Switzerland’s qualities and its attractiveness, is a real source of IMD’s strength. People don’t go to a place if they are told we do things this way, and this is the only way. You often have that in big countries. The United States is a very strong culture, in that it has strong political muscle. They say the way it works in the US is the way it should work worldwide. They have technically good schools in the US. But here people coming from totally different backgrounds get a totally different perspective.
TW: Do you have much support from the Swiss political establishment?
PL: Switzerland’s stable political scene has also played a large role in IMD’s success. In Lausanne we have a mayor who is from the Green party. What he does is ask, ‘I am very proud IMD is here, is there anything we can do to help?’ There is no town-and-gown friction. With the Canton of Vaud it is the same thing. Politics reinforce what we are doing. I see politicians as being proud of us and trying to help us, instead of being indifferent or against us. And I think the latter case is very common in other countries. The interior minister, Pascal Couchepin, sees IMD as an asset to Switzerland. He’s been here many times, he’s very interested in what we’re doing.
TW: What are the cultural attributes that make Switzerland open, in your view?
PL: I think the fact that there are three languages – French, Italian and Swiss German – creates openness. In Germany they have a much more bombastic way of seeing things than in Switzerland. The French are also rather bombastic about how they see things. In France they say, ‘Let us allow people in.’ But they have not really thought about what that would mean for jobs, for education. I think Switzerland sees immigration as more of a dilemma. They say, ‘There is no point in allowing more people in than we can integrate and treat well.’ That does not mean in my opinion that the Swiss are closed. It means they see things from all sides. The strength of Switzerland stems from the fact that you have three cultures here.
TW: You have been in Lausanne since taking the job at IMD in 1993. What has kept you living in the area?
PL: As a person living here, I find it very agreeable. People here are relaxed, there are no traffic jams and lots of beauty. There is the possibility to go skiing and to walk to work. There is tranquillity but at the same time centrality. It is close to Geneva airport and it’s close to various other places by train – Milan, Paris, Zurich. I plan to stay here after I retire. I guess it’s my first home now. It’s a place that provides ease. It doesn’t upset me with politics I can’t understand; it doesn’t upset me with ugly architecture; it has a sense of tranquillity and harmony that I like. Lausanne is also a great small city to locate learning institutions. There are not many nightclubs, but it’s still big enough to have a great ambience. There is stunning beauty next to the lake here. So people really appreciate this as a place to learn. You see that from the fact that the University of Lausanne has been here since 1537. It has always been a centre of learning. It’s a great place in terms of the size and setting. We come back to the surroundings, the beauty and the tranquillity of the place, which are very powerful.
TW: Do you mix with the high society of the Swiss business world?
PL: I go to a few concerts, a few balls. But if you are asking if it’s a clubby world – I haven’t seen too much of that. I know the CEOs of most of the companies. I could call and see Peter Brabeck [CEO of Nestlé and IMD’s largest business client]. I call him Peter and he calls me Peter. IMD is small but we are important. We are an asset for many of the companies that are our clients.
TW: Tell us a little about your daily life.
PL: I live in Pully Port [a village just outside Lausanne on Lake Geneva]. I have the whole penthouse level of a new building. Two minutes away I have Chez Pitch restaurant. I go down there to have a bottle of wine and perche du lac [fish from Lake Geneva] if I don’t cook myself. It’s very pleasant, very convenient. My work is only seven minutes away by car – if I have the time I walk along the lake, 40 minutes. Fantastic! When I was a professor at the Sloane School at MIT, I drove for 50 minutes in heavy traffic jams each way. Same when I was at Wharton. At the Norwegian School of Management, half an hour drive. But nothing like this.
TW: Do you, like many Swiss, take off to the mountains whenever you can?
PL: Yes, I have an apartment in Verbier. I go up as often as I can. I drive up. I have a garage in the basement. Both at home and in the mountains. Extremely comfortable and very convenient. I do a lot of walking. As a Norwegian, I also love skiing. I like off-piste skiing, but I don’t take risks. I’m not off-piste in an extreme sense. The only downside of owning a place in Verbier means you tend to go there all the time. I have my stuff there, my skis, my boots, my toothbrush, my Gillette razor. I also take vacations in Norway, where I have a small fishing house in the southern part together with my mother and two sisters. For me it’s important to stay in touch with my family. I don’t really go to other places for vacations. I travel all over the world for work. That’s enough for me.
TW: What do you think about Swiss food and wine. Do you like our famous cheese fondue?
PL: As you can see I’m fairly heavy so I have to watch out. I believe in a low carbohydrate diet. I eat cheese fondue maybe once or twice a year. Raclette the same. I could eat it all the time but I don’t for my midsection. I don’t eat pommes frites, and no bread. By the way, only Swiss wine is served at IMD, no foreign wine. And IMD has the only vineyard in Lausanne. The mayor asked us to do that. Lausanne used to be a wine growing area, but not anymore.
TW: Why do you think Swiss wine is not well known abroad?
PL: I don’t understand it. I think it’s fantastic. For red I happen to like Dôle from the Canton of Valais. I also like the white wines from Lavaux near where I live. Frankly, I’m very proud of the fact that I stand on my balcony and all around me there are vineyards. Beautiful!
TW: Some people say Switzerland is boring. Take the film The Third Man, based on Graham Greene’s novel. In the script, Orson Welles wrote this famous line, ‘In
Italy for thirty years under the Borgias they had warfare, terror, murder, bloodshed – but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland they had brotherly love, 500 years of democracy and peace, and what did that produce? The cuckoo clock.’
PL: I don’t think that’s quite fair frankly. After all Herzog & de Meuron are Swiss [architects of the Tate Modern in London]. These are maybe two of the top five architects in the world today. There is a lot of creativity in Switzerland, which I think has a lot to do with the three cultures here. It’s a meeting place where people come to the table from different angles. So I disagree with Orson Welles.
TW: What about the complaint – often heard from tourists – that Switzerland is too expensive?
PL: I think personally that if you go to Norway, you see a fair number of tourists coming for camping holidays. They fill up their camping vans and cars with beer and food from home. They spend little money in Norway but become a big burden on the infrastructure. In Switzerland the tourists are different. People appreciate the place, people make use of the facilities and pay for them. But I don’t find it expensive here. I don’t spend much money. The food costs a little more. But I don’t think it’s exorbitant. I’m alone, I don’t have any family here. I think some things here – the car and gasoline, for instance – are cheaper than in other places in Europe. And the wine, it’s no big deal.
TW: You are from Norway, another small country, which like Switzerland has decided not to join the European Union. Do you think that decision was wise?
'I plan to stay here after I retire. I guess it's my first home now.'
PL: I voted twice for Norway to join the EU. Both times the majority voted against it. Today I don’t know. The amount of bureaucracy and mediocrity in Brussels has become dramatically more visible. What I see today in Brussels is very much a bureaucracy that is not too different from the centralised thinking in French socialist circles. I think from a strictly economic perspective both countries would be better off being part of the EU, but there are issues such as bureaucracy in Brussels that neither the Swiss nor Norwegians think are appropriate for them. We both have mountains and valleys. Maybe that has something to do with the strong sense of independence. People detest being ruled from far away. Both detest centralised bureaucracy. Norway and Switzerland are also very rich. So we have the option of making some choices without being pressured by solely economic matters. I think that is important. The governments in both countries are rich enough to allow certain values to be placed on things like keeping the countryside and the farming sector beautiful.
TW: Switzerland has drawn some criticism over the years for remaining neutral. Swiss banks, for instance, got bad publicity in the 1990s for having allowed Nazis
to stash looted gold in Swiss bank accounts during World War II. Is this criticism justified in your view?
PL: I think the mistake of the Swiss banks over the Nazi gold scandal was not to be open immediately at that time. But I think things have changed. I was recently with Paul Volcker [former us Federal Reserve Chairman and former head of the Independent Committee of Eminent Persons that, in the late 1990s, analysed the issue of dormant accounts in Swiss banks in connection with World War II]. He told me he wanted to give a lot of credit to the Swiss banks for their openness and co-operation. I think that’s very impressive. The experience of coming to terms with the Jewish accounts has led to a much more open attitude. In the past, the cost of capital for the Swiss banks was less. Maybe in the past there was some criminal capital coming in, which cost the banks little. Swiss banks are against that today. I don’t think it was ever huge anyway, but maybe 50 years ago there was a more relaxed attitude. Now they are very clear on not supporting any type of money laundering. The key issue is the professionalism of the asset management organisations. Don’t forget the biggest asset management bank in the world is UBS. They have more than twice as much capital under management as the number two bank – totally dominant. The small private banks in Geneva are surviving and even thriving because they are good asset managers. They will disappear immediately unless they remain good asset managers.
TW: You are based in Lausanne, where people speak French, often watch French television and listen to French pop music. What are the big differences between the French-speaking part of Switzerland and France itself?
'Their policies may appear strict, but they reflect a good understanding of the dilemmas they are addressing.'
PL: I see the difference as soon as I cross the border. On this side it’s clean, things work. I think it’s very different in France. Here people are socially minded, as opposed to the individualistic side of France. The German-speaking part of
Switzerland has the same benefits. Take the strikes we see in France. They are a disaster. It’s value destruction for the nation, which makes it economically less competitive. It’s a ‘me me me’ attitude. Switzerland and Norway, perhaps because they are smaller societies, can have a broader approach. It’s a choice between ‘How can we split up the pie?’ and ‘How can we build a bigger pie to split?’ There is a lot of the former in France and Germany. This can also hurt Switzerland. One threat is there is too little growth in Europe. As such it’s very hard for Switzerland to grow very quickly too. In summary, my feeling is that Switzerland is fairly conservative, but in a good way. There is social responsibility. I think the Swiss are more practical. They look at things as hard dilemmas rather than what is the easy political way out. Their policies may appear strict, but they reflect a good understanding of the dilemmas they are addressing. For example, they accept the fact there has to be some size limit to the country in order to make it work. After World War I, the Austrian state of Voralberg voted almost unanimously that they wanted to become a Swiss canton. And the Swiss almost unanimously voted against it. They understood the importance of having a balance of German, French and Italian speakers. They were mature enough to understand that expansion would have rocked the boat. It’s all based on understanding dilemmas and living with a balance.
The conversation was conducted in English.
Peter Lorange was born on 17 April 1943 in Norway. He holds an undergraduate degree from the Norwegian School of Economics and Business, an MBA in operations management from Yale University and a Doctor of Business Administration Degree from Harvard University. Previously, he was president of the Norwegian School of Management in Oslo. Before this, Lorange was affiliated with the Wharton School, University of Pennsylvania, for more than a decade. He became president of IMD on 1 July 1993. His research interests include management of multinational organisations, strategic alliances and business policy. Lorange also serves on a number of company boards and owns the Norwegian-based shipping company, S. Ugelstad A/S.