The fourth industrial revolution is creating a new era of globalisation, where technology has transformed the way we move and connect people, goods and ideas.
At a one-day YPO and AGSM @ UNSW Business School co-hosted workshop, one theme underpinned the whole event: today’s world has never been more interconnected, bringing new opportunities and challenges for all business leaders.
As part of the world’s largest network of Business Leaders, YPO (Young Presidents Organization) members are themselves deeply connected and understand they are part of a more complex ecosystem. In one intense day of learning with some of UNSW’s most respected academics and thinkers, the 130+ delegates shared their insights on what it means to thrive in an interconnected world.
Professor Richard Holden says that while there are political and business risks today, there are also opportunities. “World trade has tripled since the start of 2000, and supply chains have never been more interconnected globally,” he said. “The technology that is driving the interconnectedness is disruptive but it helps us develop human capital. We no longer need to get onto a plane to collaborate.”
When businesses choose to expand their global supply base, it can have significant impact. New global value chains have moved over one billion people out of poverty, but switching one relatively minor component to another source country (due to a trade war or political instability, for example) can be very disruptive.
Professor Holden also urged leaders to be cautious about China. “Corporate debt in China is very high at 160% of GDP,” he noted. “If these loans are at risk of payment default, it could cause a ripple effect that is unlikely to be good.”
During a robust panel discussion on transformation, AGSM Executive in Residence and former Facebook Australia and New Zealand CEO, Stephen Scheeler described the “layering effect of technology on technology… all these things play together to create a whole new business model.”
This creates a new culture imperative: move fast, take risks, learn from failures and keep circling back. “If you’re waiting for the case study (to prove your business case), you’re on the beach waiting for the tsunami,” he urged. “Look for early warning signs, because tsunamis move fast and you can’t afford to wait.”
He described Facebook’s $1billion acquisition of Instagram as an example. “Facebook was looking for ‘faint noise’ in 2011, and saw the potential of a new app based on exchanging photos.”
Philippe Konfino, partner and head of Digital with strategy consulting firm Oliver Wyman, says businesses are already sitting on “goldmines of data. This data probably holds the answer, revealing new business models that will drive your industry and how you can thrive in the new paragigm.”
One company that has certainly mastered the art of leveraging data (and deep learning) to power new models is Amazon.
According to AGSM Fellow Patrick Sharry, Amazon’s flywheel strategy of ‘data in everything’ highlights the momentum of change that begins once everything becomes intertwined.
“Amazon uses data to lower its cost structure, which allows it to lower prices, which drives up traffic and attracts more sellers, which pushes more energy into the flywheel,” he explained. “Add a layer of further improved efficiency, and you can provide faster delivery which means a better customer experience.”
And so the flywheel keeps spinning – and new opportunities such as AWS become spinoffs. “AWS may now offer some of Amazon’s AI capability to its users. Imagine what could happen if their algorithms became 95% accurate?” Sharry proposed.
“What impact would that have on eCommerce – perhaps it would shift from shop and ship to ship and shop, because 95% of the time I wouldn’t send a recommended product back.”
“Good strategy is about building strong capabilities, that positions you well for the future,” he concluded.
In his closing address, MBA student Andrey Pankeev reflected on what he had taken from the day. Pankeev, recipient of the AGSM Global Reach Scholarship, relocated to Australia to complete his AGSM Full-Time MBA from Siberia, Russia.
“You can maximise value when you can find the synergy between personal relationships and business results,” he observed. “Invest in those relationships, they cannot be replaced by technology.”
YPO Gold member James Stevens says YPO is invaluable in providing peer to peer support and shared experiences, like this event. “It’s a broad and diverse group of CEOs, founders and entrepreneurs that understand different ways of thinking.”
Part of YPO’s own strategy is to strengthen connections an and relationships with partners like AGSM @ UNSW Business School. “We need to align with a school that is respected and trusted globally, so we can showcase the tremendous talent we have here in Australia,” noted Stevens.
If you’re interested in connecting with new insights, and at the same time extending your own network of like-minded leaders, take a look at AGSM @ UNSW Business School’s diverse program. For more information on YPO’s membership, visit ypo.org.