The podcast for enterprise leaders delivering timely insights for today’s global economy—and tomorrow’s competitive advantage.
The GET pulls business and management insights from today’s economic and societal developments to help global enterprise leaders move to the future with greater agility and performance. Offering timely conversation and analysis with renowned business leaders, The GET addresses the most pressing topics confronting global businesses and management.
The host of The GET is Christopher G. Caine, President of the Center for Global Enterprise (CGE). Available on Apple Podcasts, Spotify, or wherever you get your podcasts. Subscribe to The GET and look for new episodes on the second Tuesday of every month.
Episode 1: Restructuring Economic Relationships and Business Models Driven by the Ukraine Crisis
Air Date: June 14, 2022
The Ukraine crisis is driving a restructuring of economic relationships and business models.
With unprecedented economic sanctions against Russia, global business leaders are having to adjust to new rules governing critical economic and business relationships. Is this a permanent reshaping of global economic relationships and financial systems? Samuel J. Palmisano, CGE founder and Chairman, former IBM Chairman, and Michael Spence, Nobel Laureate, and former Dean of the Stanford School of Business, share their views and offer advice for business leaders.
Episode 2: Supply Chain Strategies to Manage Turbulent Geopolitical and Societal Developments
Air Date: June 14, 2022
First, the global pandemic. Now, it’s the crisis in Ukraine and the COVID supply chain developments in China. Supply chains have certainly been getting a lot of attention—and a lot has not been positive. The good news is enterprise leaders understand the critical role of supply chains more than ever, and the public has a new appreciation of how supply chains affect so many facets of daily life. How can we build better, more resilient supply chains that are agile and able to quickly address unforeseen, yet catastrophic events? Samuel J. Palmisano, CGE founder and Chairman, former IBM Chairman and Michael Spence, Nobel Laureate, and former Dean of the Stanford School of Business, join us to discuss strategies for managing supply chain in turbulent times.
To learn more about digital supply chains, go to the Digital Supply Chain Institute (DSCI), dscinstitute.org.
Chris Caine: Welcome to The GET, the podcast for enterprise leaders, delivering timely insights for today's global economy, and tomorrow's competitive advantage. I'm your host, Chris Caine, president of the Center for Global Enterprise. Today, we're going to focus on the topic that most consumers never concern themselves with, and frankly, a lot of business leaders underplayed the strategic bet. Supply chains, specifically strategies for managing critical supply chains in turbulent times. First, it was the global pandemic. Now it's the crisis in Ukraine and the COVID and supply chain developments in China. Supply chains have been catching a lot of attention in the last few years. And a lot of that attention has not been positive. The good news is enterprise leaders understand the critical role of supply chains now more than ever. And the public has a new appreciation for how supply chains affect so many facets of their daily life. The big question of course, is how can we build better, more resilient supply chains that are agile and able to quickly address unforeseen, and in some cases, catastrophic events. To discuss the changing role of supply chains and how business leaders can transform their organizations, we're fortunate to have with us today, Sam Palmisano, founder, and chairman of the Center for Global Enterprise and former chairman and CEO of IBM. And Michael Spence, Nobel Laureate and former dean of the Stanford school of business. Sam and Mike, thanks for joining us today. Sam, how about if we start with you, what do organizations need to do to change their supply chains-to be more flexible and to be able to adjust quickly to these oncoming and very diverse global events?Sam Palmisano: Well, Chris, thank you. And it's great to be with you today. I’d like to go back quickly on the current design of supply chain. So what drove the current design? It was a cost model and obviously needed a quality in your products, but it was cost driven models. When a cost driven model you're going to drive scale. A larger scale and scale economics should have a lower cost per unit. Therefore you're going to drive your competitive and it was significant. And it all companies drove that and inventory turns and cash management, all those things that are very, very important to a company, or a result that that model drove the design of the supply chains. That worked for decades quite honestly, to get costs out and quality up in the supply chains. What happened is they're not resilient and they're not flexible because you have a scale model. You have a concentration model trying to be in the factory of the world. That's what that results in, in a scale model. So therefore what's going to have to happen is that companies are now designed for resiliency and customer service, which is going to be higher costs, but if they can drive value to their customers, then therefore they could price for that cost because they've created a valued relationship. It could be service levels. I mean, there are models for this today. If you look at retail and everybody loves the fact that you order online and you get stuff the next day, whether it's Amazon or whatever it happens to be, that's great, but that's set the expectation from the consumer of the service levels that are required. So if you could design for agility, which means you have to address the last mile problem, you have to get it from the factory or the distribution center or the port to the house. And that's where the complication is. That's a design. It's not just near shoring, but it's nearshoring for the value you can generate for your customers or your clients, not just near shoring, because you're concerned about resiliency and political risk. Chris Caine: Mike, you've worked in the supply chain area and its relevance to economic development and economic policy for years. Thoughts on supply chain resilience and the ability for global leaders and company leaders to design more resilient and agile? Mike Spence: I think we're at the end of this long period in which we used huge amounts of underutilized productive capacity around the world, in the developing countries. and it was cost-driven, and that was deflationary and delivered astonishing, quality products all over the world at relatively modest prices. The relative price of these goods kept declining in a world that saw, rising prices and lots of other areas. Why do I think that's over? Because there isn't another China, because India is not going to go down that road because the African countries, I don't think can, fill in the gap as China, becomes a really a pretty high, middle income country and moves to different things. And finally, we shouldn't forget. then in the course of this very successful development in China and India and Indonesia in a number of countries, we've created tens of millions of new middle-class consumers. So the demand side of the global economy doesn't look anything like what it looked like 25 years ago. It's A) huge and B) it's located in a different place. So I think what's going to happen is first, we're going to have inflation. Second. let me make a prediction just to make this colorful. I think at 10 to 15 years, manufacturing broadly will not be labor intensive and the same will be true of much logistics. If that's true, I expect the movement to be toward the final market, because there are advantages in terms of, knowing your customer and whatnot, that Sam understands way better than I do. So I think that's one of the things that we're going to see. Chris Caine: We were talking about, the end customer, like you were alluding to that, and Sam, you were talking about the last mile. What's been enabled that we see in many companies that we work with is business model that they've never been able to use before, or never chosen to use before, direct to consumer or direct to customer. And it's almost impossible to have a complete, competitive advantage there if you haven't quite figured out the last mile. And we see that today. So are there innovations in the last mile, Sam and Mike, that you see coming, or. are there barriers that are so strong that a concentrated effort to overcome those barriers would be important for industry to apply itself to, Sam Palmisano: Well, I think go back to where it was before the cost model, right? And the reason why you did the things that you did, you're trying to optimize the cost, right? So there are four, whether that was logistics or shipping or all elements of that, to get it to wherever it had, whether that was a storage. Or your house, whatever it happened to be. So therefore, as a company, because you were managing your costs, you had partnerships in your supply chains saying you would use distributors or logistics companies or FedEx, UPS, whomever you could outsource to those guys, to do those sorts of things for you. However what's changed? Well, everybody wants to pick on Amazon, but that model has made everybody rethink this, and they've run an end-to-end integrated model. They have the end view of the consumer and the need to the goods that are coming on with, they're not the manufacturer nor case or the aggregator, but nonetheless, you do the same thing with Ali Baba. And then you add the payment system called Ali Pay. You see this end-to-end integration. So my point is that what are the elements of the integration that allowed them to have these service levels, but still maintain competitive costs? Well, in the distributed centers, it's called robotics. I mean, there aren't a lot of people running around in those distribution centers. I know people talk about this as far as unionization. But to me, it was like a semiconductor facility. You gonna utilize 15 people, the 400,000 on IBM. It's all going to be replaced by technology. You get to the efficiency of the trucks and yes, they were large and expensive in the past because you had your scale model, but now you have these prime trucks everywhere. They're going to become EVs and self-driving, back to Mike's point long-term. So there are lots of innovation you can actually get to the manufacturing element of this. So if we were designing, called 3d printing today, which can be done with 3d printing. So you don't have these big manufacturing centers that go to a distribution center that goes to the store or wherever it happens to be, you can print it on the spot and those kinds of things. So Mike's right. They're going to drive huge innovation, lots of productivity, but also disruption. So if you are a traditional company that's not used to operating in this model, it's going to be complicated. It's not an easy transition to get from where they are today. After a hundred years of doing whatever they did to where they need to be like what Mike saying the next 15 or 20. Mike, any thoughts? Mike Spence: I completely think Sam's got this. Right. And it's important. I would only add that when other code at the world and what's going on in, rejiggering the supply chains. One of the things that strikes me is this global explosion of entrepreneurial activity, around the internet. I mean, we now have an estimated 6.5 billion people on the mobile internet, which we didn't see coming, 15 years ago. And so you've got in a growing number of places around the world, China, India, Latin America, and so on. This is largely digital. Ecosystems that do the financing, that make it possible for people to innovate, in these relatively coordinated data-driven environments and so on. I guess in addition to this integrated model, which is pretty powerful, if I were in the, world of, thinking how we're going to get through to consumers, I'd be trying to think about what's my place, in these growing highly dynamic, digital ecosystems that are blossoming, like weeds, all over the world. Chris Caine: So you both have talked about the necessity and the power of technology to deliver supply chains that are more agile and more resilient, but where are the gaps in management? Sam, maybe we can talk to you on this first, which is, you know, it's one thing to have the tools. It's another thing to have the management processes and the management aptitude to utilize the tools in the most effective way. Where are the gaps in management of transforming a supply chain? And let's just call it, from my existing model to a direct to customer model, whether I'm a B2B or B2C company. Sam Palmisano: Well, I think Mike started with it. If you look at these entrepreneurial companies, are you looking at people that have become a very, very successful in this digital data-driven world that's all mobily interfaced with the phone, right? They have a completely different management system than a traditional company, like an IBM or a FedEx, or go through the whole list, General Motors or Ford pick anybody you want. Our management systems are a hundred and something years old, right. And these guys, including the big ones who have scaled, this hyperscalers, whether that's Netflix, Spotify, Amazon, et cetera, they have a completely different management. And their management's designed for speed agility, but heavily skill-based, it's not as vertical. We had silos and those sorts of things. I don't want to go design a management system on the podcast, but having said all that, if you look to the future, if you're a traditional company, you should model the innovators that Mike's alluding to. And don't discount them because they're small. Look at their management system, look at their skills development, look at their processes and controls all those sorts of elements that they have and decide what is right for you. Obviously, you can't just go to that day one, you have a hundred years of history, but you have to make that transition in some way. Chris Caine: I'd like to, start to close out our conversation about supply chains with government. We've certainly in the last two years, seen governments involved, support intervention and supply chains become very pronounced around the world. Governments are trying to deal with shortages of simple things like toilet paper, all the way to complex things like semiconductors. And they don't want to be in a position of having their citizens and, or their, population, wanting for even the most basic things that we're seeing right now in the United States, like baby formula. So what's needed from government leaders to achieve greater supply chain resilience and efficiency, and maybe what isn't, or shouldn't be needed? Sam Palmisano: First of all, if you define a supply chain end to end, right? The individual consumer to the actual component, they get to the manufacturer that is the supply chain, and it's global and there's nothing the regional government can do about that fact. It's always been this way. It's not going to change because they give a nice speech or they tweet it doesn’t matter. That's what it is. So if you're going to be able to solve yourself in a crisis, like we've had, you need it and, and view, which means you need collaboration, which means you need information flows, which means you mean data flows. It means you have to be able to deal with some of the privacy implications. All the things that they are doing to regulate their world is impacting their ability to optimize- and the pandemic or in a global disruption, like a war, all those things. So that I'm not saying that they're necessarily not well-intended because as they look at these very narrow elements of this, like information flows and information sharing and data privacy and those kinds of things, there's a need in certain areas, for sure. But at the end of the day, if you are going to optimize your economy, for the world that we're going to live in that requires interconnection and growth for you to sustain your standards of living or to grow your standards of living. You have to have this end-to-end view. Now where I come from, which I know many people have heard me say before, all governments in the world do not have the skills and capability to do these things, whether it's in cyber or information flows or data. It doesn't matter in these current technologies. None of them have the skills or the capability. To have them overseeing things where they don't have the capability or the knowledge is ineffective. And we ought to just understand that. And if we wanted to be constructive about it, we would assemble people who have the backgrounds to work with governments. It's a partnership, but they need to rely on people in the private sector, the academic community, people that have the knowledge, because the things that they design have all these unintended consequences, that when something occurs, it disrupts an element of the supply chain, impact society. And they just don't have the perspective of what's required. You look at some of the things that happened, during the pandemic and all that, it's because the people that were overseeing it had no experience or background. Zero. And you wonder why they can't solve the problem. So you put a bunch of people in the room that don't know how it works, and guess what you get, you get policy, you get stuff. They understand cause they're lawyers, none of it's going to work. Totally. In fact, in many cases it even makes it worse. Michael Spence: The global supply chains are a massive decentralized system. And probably in the past, we never had a way of really understanding all parts of it. But I think now we do, in digital data and I think, Sam's right. the governments don't know how to do this. They don't know what they're looking for. But a coalition of knowledgeable people from global businesses, could come together and agree that this system, is, because of this massive decentralization, is opaque. Right? If you asked yourself in the middle of the pandemic, what would you forecast? How would you forecast the blockages that we've seen, longer duration? Lots of people would have bits and pieces, but they're not assembled. There's no big data system that says this system is starting to get creaky. There’s going to start to be blockages or congestion in the system. I think that's a solvable problem. If it's true. By a kind of global private sector initiative, like the Center for Global Enterprise. Sam Palmisano: I think you have some research underway. Chris Caine: I think we do. So before we close, we like to use the last minute or so to give our listeners some strategic thoughts and insights about what they should be considering. We call it our emerging critical issues. So I asked you, Mike and Sam in one word or one phrase, tell us what emerging issues do you see on the horizon that business leaders need to put on their radar. Sam Palmisano: I would just say, overzealous governments and that means, unfortunately, business leaders have to do something none of us like to do, which is get engaged, in a constructive way. I mean, not a political way. Don't form a PAC and write checks and all those crazy things, don't get in the middle of the West- China relations. That's not your role. You don't understand this stuff anyway. But my point is that in a constructive way, engage or to help these guys try to solve the problem versus trying to just pass some piece of legislation that gets them two points in a poll, Chris Caine: Mike, one word or one phrase. Michael Spence: I think, what is your digital strategy, really? Chris Caine: All right. Thank you for those. We'll come back to those in future podcasts. I want to thank you both for your time. You've been listening to The GET sponsored by the Center for Global Enterprise, celebrating 10 years of convenient global enterprise leaders around the most important transformation business issues.
Episode 3: Business Continuity in Turbulent Times
Air Date: June 14, 2022
The world is experiencing numerous disruptions–geoeconomics, geopolitical, technology, climate change, etc. While turbulence and disruption are constant pressures on business, throw into that mix the fact that the pace of business keeps accelerating and its clear why companies are viewing data as the engine that powers more and more operations, enabling flexibility and agility. Yet, many businesses struggle to identify and protect the critical information they need for operations. Joining us to discuss how CEOs can ensure business continuity in turbulent times are Samuel J. Palmisano, CGE founder and Chairman, former IBM Chairman, and Karen Evans, Managing Director, Cyber Readiness Institute.
To learn more about the non-profit Cyber Readiness Institute and for free resources and guides, go to BeCyberReady.com.
Episode 4: Managing Brand Identity and Strategy When Driven by Geopolitical Events
Air Date: June 14, 2022
An unprecedented number of companies have supported economic sanctions against Russia in response to its invasion of Ukraine—in several cases going beyond what the sanctions call for. In the past, companies have rarely taken public positions that could hurt profits. That has changed and the public—and employees–now expect global brands to do the right thing. Shelly Lazarus, Chairman Emeritus, Ogilvy, and Jon Iwata, Executive Fellow at Yale School of Management and former IBM Senior Vice President and Chief Brand Officer, help business leaders navigate managing brands and marketing strategies when driven by geopolitical events.