Day 1: WOBI Management Week Recap
Over four days this week, a diverse range of business leaders and transformational thinkers are convening online for WOBI Management Week 2021. Acertitude is excited to be in attendance to summarize for our readers what trends, topics, and predictions are top of mind for global business leaders right now regarding the global economy, digital transformation, hot new investment opportunities, and more. On that note, here are three key takeaways from Day 1 of the event.
1. Asia is at the helm of global growth.
Parag Khanna, a world-renowned authority on globalization, kicked off the day on the main stage by sharing his foresight on the global economy in a post-pandemic world — from how geopolitical and market competition will play out to analyzing the major drivers of the next world order, to Asia’s rising global weight.
The future will be bold — expect a world with both incremental regional reopenings and seamless supply chain integration. The future geopolitical marketplace will embrace networks across hierarchies, said Parag.
“For the first time in history, we now live in a world where every region actually matters,” noted Parag. “There is not one power at the center. It is not China. It is not America. It is no one.”
Over 60 percent of Asian trade, for example, is now within Asia, he said. This region is specifically becoming ever more self-sufficient. “Even at over 60 percent internal trade, there is a long way to go,” he said. But it’s not about dominance, he said. It’s about competition.
We're still live with the session on global economy in a post-pandemic world with @paragkhanna!#WOBI#GlobalEconomypic.twitter.com/qYbmcYpjkf— WOBI (@wobi_en) June 28, 2021
The densest triangle of trade on Earth exists between China, Japan, and South Korea. “The Pacific Ocean is the largest barrier to human contact in the world,” he emphasized.
Parag predicts leaders will specifically see the most future trade in the world happening in Asia — which accounts for over 50 percent of global Gross Domestic Product (GDP) in Purchasing Power Parity (PPP) terms. China, he said, is the global growth anchor. At 2.3 percent, China was one of the only economies to record positive GDP growth in 2020. Earlier this year, the International Monetary Fund increased China’s GDP projection, estimating growth up to 8.4 percent in 2021 – a ten-year high, Parag referenced. “China has continued to place itself very strongly in the heart of the Asian story,” he stressed.
The population is reaching its peak
In the meantime, the world population is going through a very significant inflection point — perhaps the most significant one ever, he said. “The world population is very close to reaching its peak,” he said. “I would say we’re close to reaching peak humanity.”
“By definition, the majority of humanity is going to be Asian — and it already is,” he added.
Key opportunities for both East and West collaboration are emerging. For example, consider that Asia’s GDP is expected to grow by $22 trillion in the coming decade, he noted.
The future of human demographics summed up in two words, he said, is “Asian Youth.” (Two billion people, he said, are young Asians. And China and India both have more young people than the entirety of America, he told attendees.)
2. To transform your business, start from a baseline, not from a KPI.
Next to take the main stage was Amy Webb, one of the world’s most sought-after futurists, and someone Forbes once said is a woman changing the world. Amy is also a professor of strategic foresight at NYU Stern School of Business and founder of the Future Today Institute. Amy, who advises people like CEOs leading some of the world’s most admired companies, three-star admirals, and senior leaders across the banking and intergovernmental sectors, talked about the latest technological trends that will influence business in the coming years. She also discussed how emerging science trends relate to business.
"Setting goals in the beginning is not a vision, It's a KPI." - Amy Webb#WOBI#DigitalTransformation— WOBI (@wobi_en) June 28, 2021
“The future is about getting up and getting back to work,” she said. Amy began her presentation by talking about a futurist’s framework for strategic planning. Many executive management teams, she explained, when looking at their 2030 visions, leap ahead to the future without assessing the present. But it’s critically important to start from a baseline — not from a KPI — to transform your business. Defined metrics that make sense internally do not always take into consideration the external factors — such as the government, wealth distribution, the environment, public health, infrastructure, and so forth — that have no control on business impact. This is a key strategic planning loophole, she stressed, that demands addressing. Organizations, she said, must better identify risk and opportunity before disruption hits.
Amy posed a solution framework. Instead of arbitrarily assigning goals on a quarterly or yearly timeline, she suggested leaders first identify highly probable events for which there’s already data or evidence, and then work outward from there. Leaders must harness the strategic tools of a futurist for the benefit of themselves and the organizations and markets they serve.
Most change develops and grows quite slowly.
“Executive management teams tend to want to reduce risk and predict the timing of technology. I totally get all that, but most change happens slowly,” she said. “Change is more like a rhino than a black swan.”
Most companies, when thinking about their future, tend to track what they know and use a narrow scope, she said. A fundamentally different approach is necessary, she said, urging business leaders to widen their aperture to take in more signal data. It’s about utilizing both convergent and divergent thinking, she stressed. And about considering what tensions, assumptions, and resolutions hold to ensure a business model succeeds in time.
Said Amy to attendees, think both near- and long-term simultaneously. Account for uncertainty. Ask questions. And when you find signals, ask the simple yet powerful question, “What if”?
3. China will soon become the world’s largest economy.
Rounding out the day on the main stage was Chinese private equity pioneer and economist, Weijian Shan, chairman and CEO of the Hong Kong-based investment firm PAG. He talked about how’s China’s shifting strategic role is impacting businesses globally. Weijian, who has led landmark transactions that generated billions in profit and the stabilization of Asia’s two biggest banks during the 1997 Asian Financial Crisis, was formerly managing director and chief representative for JP Morgan across Asia. Weijian explored the impact of geopolitical changes on global East versus West supply chains and the keys to better understanding the highly lucrative Chinese market
"A number of foreign companies have really taken China as their most promising market." - Weijian Shan#WOBI#GlobalBusiness— WOBI (@wobi_en) June 28, 2021
China’s economic growth model is somewhat different from that of many other countries, said Weijian, in that China spends much more on investment compared to other countries. In the past couple of decades, every year, China invests about 45 percent or more of its GDP, he noted. But other countries will not invest more than 35 percent of their GDP. This is because China has the highest savings rate – but one that’s not sustainable. Two reasons are that China’s population is aging at very high rates and the one-child policy. About ten years ago, China’s exports represented 32 percent of GDP. “Indeed, China turned into a factory of the world,” he stressed.
In the past five years, private consumption has increased to 39 percent of GDP – up by four percentage points, he said. Recently, a number of foreign multinational companies have taken to China as their most promising market. For example, there are twice as many iPhones in China compared to the United States. General Motors sells more cars in China than the United States, Mexico, and Canada combined. Kentucky Fried Chicken? It’s the largest fast-food chain in China, he pointed out.
There are twice as many iPhones in China than in the United States.
“China is one of the most difficult markets in the world for a foreign company to operate in,” he emphasized. “But once you operate there and have learned the ropes, China is where you can make returns.” The reason, he said, is because China’s market is one where you can scale up due to its enormous consumption power. “If you know what you’re doing, it’s a very profitable market,” he added.
Both China and the United States are single large markets, he emphasized. “That gives you some advantage — especially in a pandemic,” he said.
“Two to three years ago, I predicted the trade war would be a failure,” he noted. “Trade deficit is a function of spending beyond your means.”
“Trade wars would hurt people, especially the country which imposes tariffs, because consumers have to pay tariffs,” he says. “I think trade wars, technology wars, and financial wars may make life difficult for some people and companies,” he emphasized. Other countries like Japan, Australia, and Germany are perhaps much more capable of exporting goods to China than the United States is, he said.
If you’re an investor of different companies, you know supply chains are difficult to change, he explained. “To move the entire chain around will be impossible,” he said.
China spends seven times as much as the United States does on infrastructure, he said. Consider, for example, that 70 percent of the 100 tallest bridges are in China. And that China’s high-speed rail system is twice as long as the rest of the world’s rail system combined.
“In the next five years, China will overtake the US as the largest economy in the world,” he said. “The economic threat is happening every day.”
“The biggest misperception by many people in the West in China is it’s not a capitalist economy. For me, it’s very capitalistic — at times, too capitalistic,” he explained. The private sector is about two-thirds of China’s economic growth, he emphasized. But a typical Chinese individual perhaps doesn’t often tend to know that Americans are typically very socialistic, he stated.
When asked what investment advice he had for attendees looking to invest not only in a company but in a leader, he responded by emphasizing that a leader can either ruin a company or make the company very successful. “If a company is undermanaged, they simply replace management,” he said. “A good leader has judgment and knows how to make the right decisions.”
Today’s rich, thought-provoking presentations and conversations were forward-facing and optimistic. One reoccurring theme expressed often was that Asia is likely a key opportunity for business disruption.
The key takeaway leaders expressed? Asia may be a key investment opportunity for business disruption.
Another key takeaway was that effective leaders must embrace both a heads-down, nuts-and-bolts approach to business strategy and a futuristic-focused, head-in-the-clouds approach to truly thrive, remain resilient, and keep transforming on.
For more information on the latest global leadership perspectives, read our Day 1, Day 2, Day 3, and Day 4 WOBI recaps.
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