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The best performing companies in this climate
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have put the people who talk about resilience
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in the same room as the people who talk about growth.
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(tranquil music)
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How are leading companies today
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navigating global uncertainty?
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Well, first of all, there's a lot of uncertainty.
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So CEOs are just taken aback by it,
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and it keeps continuing one event after the other.
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So one thing CEOs have started doing is expecting it.
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They say this is not gonna go back to normal.
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We don't even know what normal is right now.
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We gotta plan for uncertainty.
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So we need to build the buffers
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and the resilience in our planning to be able
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to do strategic moves without being bogged down
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by uncertainty or frozen into indecision by uncertainty.
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What do you think is the greatest impact
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that you've seen across your client list?
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A lot of volatility on your cost of goods sold,
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on supplier base, on even the resilience
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of the supply, whether you can secure the supply.
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This was something we took for granted for 40 years,
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that you will have a global supply chain
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and it's gonna magically work with no buffers.
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And that is the biggest difference,
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that CEOs are really thinking
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that their supply chain security
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is something they cannot take for granted.
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And even if they have more suppliers with smaller volumes,
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it's worth the resilience that you get from it.
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Yeah, because it becomes impossible for them to plan.
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Exactly.
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And has that been the same
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across all the different industries you're working in?
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Well, for the manufacturing and the goods industries,
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that's been very top of mind.
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For services, it's more around investment screening,
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because cross-border M&A is a big part of services.
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Many services are global in nature.
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So making sure that their operating models
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can work across geopolitical fault lines
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in a multipolar world.
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So for services, the top-of-mind question
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is investment screening,
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and how can I maintain my operating model
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so that I can have a global business
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without falling afoul of regulation.
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And what capabilities do you think
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are helping companies stand out
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and navigate this better than others?
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I think the number one thing
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is what we call a geopolitical muscle.
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I used to say this three or four years ago,
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and people said, "What now?"
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But it's different now.
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People have started to understand
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that if volatility remains a feature
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of how we have to run our businesses,
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then geopolitical muscle helps you plan around it
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and take it on without having to anticipate it.
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So setting buffers,
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building resilience in your supply chains,
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all of that becomes part of a geopolitical muscle.
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So one thing that I say often,
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the best performing companies in this climate
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have put the people who talk about resilience
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in the same room as the people who talk about growth,
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so that resilience doesn't become a different conversation,
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resilience becomes an enabler of growth
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while managing the risk.
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And those are the companies that have done really well.
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Where are you seeing expertise in your organization help
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to drive growth and not just manage risk?
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Yes, so I think CEOs thrive on growth.
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If you look at total shareholder return,
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it's the growth companies that get rewarded
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by the shareholders.
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And that's the number one priority.
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This year we have seen CEOs' mentions of growth
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going up by 12%.
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You know, you mentioned one story happening
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after another, happening after another.
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What story do you think people
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aren't paying enough attention to right now?
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Well, that's a tough question
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because there's just so many headlines.
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And I think we've reached a point in life
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when we pay attention to every headline,
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which is a problem in itself.
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But I think there is one thing
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that hasn't gotten enough attention is the impact
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on emerging markets of the geopolitical volatility.
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We talk a lot about the impact on US, Europe, on China,
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but we don't talk about emerging markets.
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Just this morning we heard that Nigeria has said they'd want
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to talk to the IMF to get some support.
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So what is happening is because of the volatility
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in energy prices, emerging markets get a triple whammy.
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First, cost of energy goes up, most of them import energy.
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Two, their currency starts declining
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because there's a flight of investment
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from emerging markets.
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Three, the dollar gets stronger
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and their debt is in dollars.
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So that triple whammy suddenly puts the emerging markets
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on the back foot, and Nigeria was the first one.
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But there's several vulnerable markets from Vietnam
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to Pakistan to Bangladesh, to a certain extent even India,
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that are vulnerable to some of these shocks.
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And so watching that would be interesting,
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especially if the oil crisis prolongs for a long time.
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(tranquil music)