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Apr 02, 2024
Distinguished fellows, Distinguished Excellencies, Distinguished Ladies and Gentlemen, Good morning to all of you. Indeed, it is a pleasure to be here at the Institute of Directors UAE Global Convention 2024 in Abu Dhabi on a very vibrant morning.
As IOD's President, Lt. Gen. Surinder Nath said, 'Knowledge, Innovation, Productivity, and Economic Growth'. I think the theme of this conference is going to bring out the many facets of this exciting phrase. The theme of this year's UAE conference is 'Boards strategy for a future-ready business in an uncertain world'. It is a very apt topic.
'Once in a lifetime'. How often do we all say, 'Once in a lifetime'? It is very rare, or very rarely, that we use this phrase. In the current context, the 21st century is a potpourri of once in a lifetime events and themes. The advent of machine learning and artificial intelligence on the technological front, the transition of power from west to east on the economic front, and the challenge that unipolarity is facing on the political front across the globe are a few of the rarest events that the current generation is facing.
The world is witnessing today multiple macro-trends that are not only rare in the context of the history of this planet but also transformative in nature for future generations to come. On the economic front, fast forward 20 years to 2045, and we will see Asia becoming 50% of the world's GDP. Not only that, with an extremely high saving rate, Asians will be saving literally $25–$30 trillion annually, and 10 of the top 20 economies of the world in PPP terms by 2050 will likely be from Asia. This will result in a massive power shift in terms of not only financial assets but also virtual assets and intellectual property toward Asia. Whether it is oil or semiconductors, manufacturing, population, or even skilled labour. The strides in Asia will result in a massive and tectonic shift in the political, economic, and social landscape of the planet. Additionally, we are seeing a massive shift that technology 4.0 is bringing to the planet. With predictive data analytics, machine learning, and artificial intelligence, the human mind is reaching a terrain that no past generation has ever seen. All of this is going to bring massive challenges and opportunities globally, and hence the unknown will be among the greatest challenges that organisations, their boards, and their leadership are going to face. I would complement the Institute of Directors, India for having chosen such an important, impactful, and practical topic for this year's theme at the UAE conference. It will be a great honour to listen to a galaxy of distinguished speakers and, over the next few days, discuss and form strategies around this. I'm sure this will give a heads-up to organisations of size to evaluate, define, and implement future strategies to effectively combat these unknowns.
I think in the last few centuries, since the inception of the Renaissance, we saw transformation in the 17th century, when the industrial revolution made massive strides for humanity. Even before that, since the inception of civilization, I must say that businesses have been running in some form or another.
In the last 25 years of my professional career, I have already seen many financial waves on the investment and technology sides. I go back to my days in the 2000s and the late 1990s. At that time, 7% of the world's population was online, and today we have almost 90% of the world's population that is online. Another interesting data point is mobile phones. Hardly 740 million mobile phones existed in the early 2000s, and today, interestingly, cell phones outnumber the human population. We have 8 billion cell phones, a little more than the number of people we have on the planet.
In that context, I want to quote one of my favourite authors, Alvin Tofler. In one of his books titled 'future shocks', he wrote, “The rate of change of change itself is accelerating at a very rapid pace”. The acceleration. I am not saying this; Newton is saying this. Because this is Newton's law of inertia, we are in a constant state of motion or in a state of rest.
I want to bring out a few examples today of organ organizations whether you call it lack of foresight, being snobbish, or just hard luck who actually did not survive times. But during the earlier days of my career, when I started my career in private equity, there were three books my supervisor gave me to read: 'In Search of Excellence', 'Built to Last', and 'Good to Great'. I'm sure most of you have heard about these three books. What is ironical, and I'm not sure whether I should use ironical or paradoxical, is that when you look at all these three books put together, the authors refer to somewhere around 50 companies. McKinsey did a study over 20 years and found that hardly 8 of these 50 large companies, most of them listed in the USA, outperformed the S&P 500 by more than 5 percent, and one of every seven did not survive.
Given this backdrop, given the fact that it's not Blockbuster that employed 84,000 employees with 9000 outlets, but Netflix today. Obviously, companies like Sony, with due respect, did not manage the Apple era quite well.
With predictive data analytics, machine learning, and artificial intelligence, the human mind is reaching a terrain that no past generation has ever seen. All of this is going to bring massive challenges and opportunities globally, and hence the unknown will be among the greatest challenges that organisations, their boards, and their leadership are going to face.
In that context, today's topic is extremely apt, and the capabilities of business model innovation are what the eminent panel is going to talk about today. Of course, we have many topics within this.
We saw a supply shock post-COVID. How many of us have read that there was a very similar supply shock post World War II? Post-1945, business grew faster than people thought because there was a lack of trust among nations. This resulted in a massive supply shock and a massive hyperinflationary environment. And we saw something similar with the Ukraine war. Hence, we saw a supply shock. Perhaps in the next few years we will have supply shocks due to artificial intelligence. How many firms are ready today?
Of course, no discussion is complete without talking about the net zero debate. I'm sure that with the eminent speakers that we have today, we will be able to get a lot of benefit and hopefully deploy, decode, and implement some of the strategies across organisations.
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Institute of Directors (IOD) is an apex national association of Corporate Directors under the India's 'Societies Registration Act XXI of 1860'. Currently it is associated with over 30,000 senior executives from Govt, PSU and Private organizations of India and abroad.
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