Forbes 2023 APEC CEO Summit by Forbes - Dailymotion

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00:00 I'm here at APEC with Bob Moritz, who is the global chairman of PWC, and my eyes

00:05 nears into the rooms I don't get to go. Bob, so you just, first of all, how is, how

00:11 is the conference so far for you, the APEC Summit? We've been knowledge

00:15 partner for 14 years. The sense of... That's why we hang out at the PWC booth.

00:20 Absolutely. The sense of interest in this one is at a particular peak, and you

00:24 have two things that are happening. One is clearly a geopolitical overhang that's

00:28 there, and particularly with President Biden and President Xi trying to come

00:31 together and seeing what's coming out of that. So there's an eagerness and a

00:35 buzz waiting to come across. The second, though, is a sense of urgency in

00:40 terms of some of the big world challenges that are happening right now

00:42 and the role that the Asia-Pacific region can play. And that's going to be

00:46 important as you look at the next decade in terms of the importance of this

00:48 region. So there's a sense of coming together and coming out in terms of the

00:54 world stage and the role and the responsibility that these particular

00:56 countries and the companies within them have to our worldwide economy. Now, I know

01:00 you're not a soothsayers. You can't predict the outcome of any political

01:04 discussions, but how have the tensions between the US and China impacted

01:09 business, if at all? Well, it has impacted. Let's be clear on that. You have sort of

01:14 three things that are discussed in the boardroom. It's actually impacting do I

01:18 invest or not, and that goes to in China or, for that matter, from China into the

01:23 US. So that's a big issue. Second is the cost of what's happening today. So the

01:29 sanctions and the additional cost, and that goes to compliance costs and it

01:33 goes into uncertainty and time issues when people are making decisions. So

01:37 having two sets of data, two different technologies in parts of the world, if

01:42 you're a multinational, there's an extra complexity associated with that. So that

01:45 becomes a problem. And then third is how do I actually take advantage of the

01:49 opportunities in each of these two countries, and can I? Should I? And

01:54 if I'm not there already, am I willing to invest in it, or do I wait a little while

01:58 to see a few more signs of thawing out before I actually make those decisions?

02:01 Those are the things that are realities of what's happening in the boardroom.

02:04 Can I follow up on that a bit? By the way, some global leader just walked by and was like,

02:07 "Eh, I'm at Bob Ross." But because politics is by its very nature, you know, shifting,

02:15 let's put it that way, these are long-term decisions that your clients

02:18 make and you make. So will there be, if we see some sort of, I don't know, thawing,

02:24 detente, closer relations, is that going to have an immediate impact, or do you

02:29 think it's really still a wait-and-see? It's still a bit of wait-and-see. The

02:33 reality is today you're going to hear some high-level discussions coming out of

02:36 two very senior leaders of the two largest economies in the world, and

02:40 people have seen these dialogues before, and the question is, did they actually

02:44 prove sustainable and fruitful? So what's going to be really important is going to

02:48 be in the next six months what happens after this. Come back to the issue at

02:51 hand. So think about supply chain, for example. China has historically had a

02:56 competitive advantage because of the scale and the economics that came from

02:59 that scalability. And historically the world looked at China and said, "Okay, I'm

03:02 really good because they got the skills, they've got the infrastructure, and they

03:05 got the scalability, and therefore it's the only place to go." So you had a

03:09 concentration risk. But what they're looking at now is, let me think about

03:12 that from, are they going green fast enough? Are they giving me the data I

03:16 need to manage my supply chain? Do I have stability in some of the rules,

03:20 regulations, policies, and procedures? And if there's a little uncertainty there,

03:23 it's going to slow down the decisions. Now, I'm not going to say it's going to stop

03:27 them because it won't, because the enormity of China is still going to mean

03:31 it's going to be a very large player, but it may cause others to think about

03:35 alternative sources. So the counsel that you give your clients on those fronts,

03:40 any insights you'd want to share with regard to some of those answers to those

03:45 questions? Yeah, the message is as follows. Number one, the supply chain

03:49 decisions have to be actually brought much more so to the C-suite and not left

03:53 to the middle management discussions because they're two important

03:55 organizations. We saw that during COVID. Second is, are you actually assessing the

04:00 right issues? And they have to be tied together. So if I'm sitting in an XYZ

04:04 company that's made a 2030-2040 commitment, if I'm not thinking about

04:09 climate in my supply chain, I'm actually missing the boat. So I've got to

04:13 actually connect a lot of dots. Third is, as you make these decisions, you're

04:17 looking at a portfolio of supply chain alternatives for you now because you

04:22 want agility and speed and certainty. And the world may change pretty radically.

04:26 You might have another pandemic that shuts something down. You might see a

04:29 policy procedure that actually shuts something down or maybe a cost that's so

04:33 prohibitive. Can you pivot very quickly? So those are the things when you think

04:37 about what successful companies will be doing going forward. It's going to be

04:41 speed and decision-making. It's going to be agility to move really fast in scale.

04:46 And it's going to be the quality and experience of the leadership teams that

04:50 take advantage of opportunities they see whenever they arise and minimize the

04:54 downside risk from them as well. So it's the geopolitical landscape. Ironically,

04:59 the issues of Ukraine and certainly Israel, Hamas, etc. is not within the APEC

05:06 region per se. Are those the big overhangs in terms of just global growth

05:12 right now or are there other issues? You mentioned China that you think are

05:16 impacting how and where U.S. companies grow. You've actually got the

05:21 geopolitical overhang. You've got the macro economy uncertainty where you're

05:25 slowing down and there's huge compression on the bottom line. Do you see

05:29 a recession coming? I don't see a recession coming per se, but I think

05:32 we're going to be around the edges on any given quarter in terms of positivity

05:37 or negativity. And let's not focus so much on the technical definition of what

05:41 a recession is because I think that's the wrong thing to be focused on. But the

05:45 third thing is the amount of capital that's needed to solve for some of these

05:49 larger challenges. And where's that going to come from? If the world's economy is

05:52 slowing down, how much capital do governments have and corporates have to

05:56 actually make the investments to deal with education, food scarcity, AI, climate,

06:02 etc. And that's the other aspect out there that when organizations are

06:06 thinking about this stuff, they get so tied up with that. Well, I'm gonna give

06:10 them the advice. Control what you can control and then scenario planning for

06:14 the stuff you can't control because if you're just gonna react to the headline

06:17 news or some of these big monstrous issues, you'll be in a state of

06:21 paralysis and never actually make any decisions. And that, Kenley, is the

06:24 wrong thing for businesses. But the second thing I will say is that

06:28 businesses have to understand they need to change. So in our last CEO survey,

06:31 it was almost 60% in this particular region that said they're not going to

06:36 survive if they don't radically change their businesses in the next decade.

06:39 They'll be out of business. Are they talking primarily about AI and generative

06:43 AI? Because that's obviously a big shift since last year. It's a big piece of it, but not the only

06:47 piece. How they price, how they manage risk and compliance in a world where

06:52 you're gonna see a lot more fracturing of that in terms of each country, even

06:56 this state, coming up with its own rules and regulations. There's a cost and

07:00 complexity associated with that and a big tail risk if you get it wrong. So

07:04 it's all of those things. And then last but not least is as we see the consumer

07:07 change their buying patterns and their behaviors, are you quick enough to

07:11 respond to those things as well? So there's a lot of different things in

07:13 terms of the change that's coming. So people have to be ready for it.

07:16 One other question I want to ask you is the serendipity factor because you go to a lot of

07:20 events like this. You take the 30,000 foot view and I'm sure you go deep when

07:24 there's problems in the organization and such. But what is on your

07:30 radar in terms of anything here that thus far has surprised you, delighted

07:35 you, any other economy you'd be keeping your eye on since we tend to focus on

07:40 the big traditional ones like China? There's probably two things that have

07:45 surprised me that have not been discussed very much yet. One is the

07:49 connection between climate and AI. And if you think about this... One is a tool to help the other?

07:54 One's a tool but also one's a liability. So the AI will be hugely impactful in

08:00 terms of dealing with the energy efficiency necessary to actually deal

08:03 with climate change. People tend to forget there's a huge amount of energy

08:07 to actually fuel the AI. And to be very specific and granular I can think

08:11 about a conversation with a CEO talking about I'm gonna go long AI but you just

08:16 made a 2025 commitment. And these two things don't reconcile. So how do you

08:22 connect those dots? The second thing for this part of the world is the

08:25 implications to the labor force. Is the labor force being skilled?

08:30 Two things. One is are they being skilled to actually leverage the AI, both develop it

08:35 and leverage it and use it? And second is their job loss and is there a period of

08:39 time where there's a bit of a mitchmatch? Humanity over time has shown us

08:44 there'll be an eventual catch-up. The question is can you afford to do that in

08:47 some of these countries? And the combination of AI with robotics really

08:51 impacts manufacturing in a big-time way in the countries here. They've been very

08:56 human dependent on that manufacturing over the last decade or two. And yet it's

08:59 interesting that 17 of the 21 APEC economies are having declining birth

09:04 rates. So maybe long-term like in Japan, robotics and AI will actually be

09:10 something that's necessary to keep the economy growing. Yeah and but then go to

09:14 the other side when you look at the Malaysia's, Indonesia's, etc. in terms of

09:18 how will you continue to create innovation to have enough jobs for the

09:22 skilled labor that hopefully you actually have helped educate. Anything

09:26 else on your radar, Bob, you'd put on ours? No, the big thing right now is how do

09:30 leaders lead through these uncertain times? And that's where we're gonna see...

09:34 Any advice? Here you are a leader leading in uncertain times. Yeah, the couple of things I

09:39 would say first and foremost is they got to have a degree of personal resiliency

09:43 and you better have some thick skin because you're not gonna please

09:45 everybody. And we see that with any issue that you take a point of view on because

09:49 the world will... Protesters outside... You name it, right? In terms of what happens. And oh by the way

09:53 that brand, personal brand or corporate brand, can be changed in an instant with

09:57 social media the way it is right now. Whereas a decade or two ago you might

10:01 never even hit the radar screen. So that's point number one. Point number two

10:04 is how do you have the right people around you as a leadership team because

10:08 it's gonna be the collective team that's gonna be super important. And do

10:11 they understand these big macro trends? And last but not least is can they drive

10:15 change at the scale necessary with the speed necessary? And that means change

10:19 culture. Yeah. So there's gonna have to be a cultural shift to deal with what I'm

10:23 gonna call the tax, akinly of the history of what we've had in the last two

10:28 or three, four decades. There's a bit of a penalty out there in terms of the gap

10:32 that exists that we're gonna have to transform ourselves to the next stage of

10:36 life as we know it. We have to now suddenly pay our debt that we've been accruing.

10:40 Well on that happy note I suppose or certainly food for thought. Thanks for

10:45 joining us. Happy to be here.

10:48 you

10:50 you

10:52 [BLANK_AUDIO]

PWC Global Chairman Bob Moritz On How Geopolitical Tensions Are Affecting Boardroom Decisions

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Forbes 2023 APEC CEO Summit

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