 Welcome to our Brightline panel on transforming to meet the new world order. We've got a great panel to discuss that topic today, experts on globalization in different ways. Before I introduce them though, let me introduce the topic. We've lived through an era of trade expansion, which has brought enormous benefits, both in terms of growth, the profitability of corporations, and also the reduction of inequality between nations, if not within nations. But we're now in a different place. We're seeing trade as a proportion of GDP plateauing or even declining. We're seeing an increase in political and economic frictions between nations, and we're all wondering, where is this thing going? What's causing it? Has there been any substantive structural change, and what can corporations do about it? So that's the topic of today's panel, especially we'll be landing on the transformation imperative, which is do we need to transform or change our corporations to meet these new circumstances or not? So let me introduce our illustrious panel, starting off with Haian Wang, who is a managing partner and co-founder of the China India Institute, and of course, China and India play a tremendous role in globalization. She's an expert on the rise of China, and she's authored a number of books on globalization related topics, including the quest for global dominance, getting China and India right, and the Silk Road rediscovered. So welcome, Haian. Anil Gupta, next, who has actually been a co-author on those same books, is the Chair of Strategy, Globalization and Entrepreneurship at the University of Maryland, and has written extensively on topics of globalization and strategy. And then we have an eminent practitioner, Jagdish Mitra, the Chief Strategy Officer and Growth Officer of Tech Mahindra, that's the part of the Indian company Mahindra that deals with software and technology and ventures. And he has not only the experience of his work with Mahindra, but also he sits on a number of important cross industry bodies in India, such as NASCOM and FICCI. So welcome to the panelists, and maybe I can start by asking each of the panelists to open with a statement about what they think is really going on. So I think we all see the phenomena of trade plateauing. But is there any really profound structural change here? And where are we heading? What's the what's the likely end state? Anil, if I could ask you first, please. Thank you, Martin. And I think you set me up very nicely. Now, the way I see is that many commentators today are almost like voices in an echo chamber that they bemoan the supposed end of globalization, which has brought massive worldwide prosperity over the last many decades. However, I would argue that what we are witnessing today is actually the concerns about the end of globalization are almost like a hypothetical observer in year 2000 looking at declining sales of chemical films and bemoaning the supposed end of photography. You know, in fact, what's been happening over the last 30 years in fact, not just over the last decade, is the facing out of the old globalization that was characterized primarily by trade and physical goods. In its place, what we see is the rise of a new and actually even more powerful digital globalization, which is already, according to analysis, adding more to worldwide GDP than old physical globalization. So stated bluntly, what we are witnessing today in globalization is a morphing from connectedness via atoms to connectedness via bits. And this new digital globalization to make it more concrete is playing out in many different ways. And let me just pick some of the more important ones. First, we see the rise of global clouds. And in fact, the three biggest cloud companies, Amazon, Microsoft, Alibaba already account for about 80% of the market share in cloud services, and they're all global. Second, the biggest multinationals of today are not ExxonMobil, Chevron, and the like, but the biggest MVP, the biggest global giants of today are all either purely digital companies or digital enablers, like a Facebook, a Google, a Microsoft, an Apple, an Alibaba or a Tencent. Third, many goods that were earlier purely physical are now actually becoming physical and digital. Just take a Tesla car or an iPhone. Even after you bought the physical product, digital services keep riding on top of the sensors and software built into the product. And these digital services continue to be actually deployed on a cross-border basis. That's digital globalization. Number four, an increasing chunk of the consumer's dollar or rupee or yuan is now spent on actually not physical goods, but digital goods, such as movies, music, and games that are actually streamed across borders. Four is that, especially spurred by the COVID-19 pandemic, is the rise of collaborative science, which already had been taking place. But just look at the hundred or so vaccines being developed. Virtually all of them are massive cross-border efforts. They're just one example of collaboration in science and technology. And finally, look at the diffusion of ideas. Every AI developer in the world is scouting for the best work being done anywhere else on the globe. And so that they can emulate, they can imitate, they can borrow, they can steal whatever, but diffusion of ideas or business models in Silicon Valley that are in fact studied very intensely by any budding entrepreneur elsewhere in the world. So to summarize, Martin, the way I look at it is to paraphrase the old saying in Britain, the old globalization is dead. Long live the new digital globalization. Thank you for that, Anil. If I could just ask a little follow-up. So you're saying that there are new drivers of growth which replace the Ricardian trade advantage, mainly digital, and that seems clear. But I wonder if this new globalization is actually means less global economic integration. So we're used to one of the tenets of globalization being the active open trade and open markets. This polarization of nations that we're seeing right now, is that a structural feature or is that just a temporary hiccup? And does that matter? So if you allow me to be a bit blunt, Martin, I would say that looking at economic globalization or economic connectedness in terms of physical goods, it's really an orthodoxy because when we look at, for example, Tesla, a factory in Shanghai, factory in Berlin, there'll be other factories around the world. So production actually will of course be largely local for local or regional for regional. However, what will flow across borders would be capital and would be know-how and of course would be software and services that flow on top of the physical products. And all of that to me, capital flows is economic. Digital flows are economic. Technology flows are economic. Service flows are economic. So therefore, economic globalization is alive and well. It's just different. Thank you for that, Anil. Jagdish, from your perspective, what's going on here with the plateauing of trade and where are we heading, do you think? How do we interpret this slowdown in at least globalization as conventionally defined, let's say? Thank you, Martin. I think there's some interesting phenomena happening and I think it would be fair to say that none of us probably can predict exactly how it will play out, but we can kind of see the trends that are coming out in terms of what the impact of this plateauing of globalization may mean. I think to a certain extent the plateau is about stepping back and thinking and also adjusting to how the whole world is going to react to this new environment. We're all calling it the new normal, but I don't think everyone knows what the exactly the new normal is going to look like. So we're actually preparing for it and sort of reacting fast enough and the organizations, countries, and businesses that can react faster are probably going to be the ones that if there is a winner and a loser, probably the winners and the losers. If you look at it, what's happening, if you look at from a trade flow perspective and the economic impact, pretty much similar to what Anil talked about, the flows are changing to a large extent of from goods, which are obviously going to be needed and flowing, but a large extent being replaced by data flows. And those data flows are getting impacted by this movement and people are trying to figure out what digital supply chains will mean, what could mean in terms of how to make meaning out of the data that you've been able to capture so far and make sure your business can be ready to be able to support it. So to a large extent, Martin, I think what's happening is businesses are readjusting themselves to see what parts of it can get impacted by digital and what parts of the whole supply chain can therefore we still have to continue in a physical world. Now, mind you, I think we still live in two worlds. I think we still live in worlds which are easy to move to a digital setup and we still live in a world where there is significant amount of work that needs to be done to build a digital infrastructure to be able to adjust against it. Now, by that, I mean developing economies. The developing economies will therefore face a larger challenge in terms of adopting to the whole digital world. But the positive side, I think is really about governments and organizations trying to deal with a large amount of being ready by themselves, which means they're choosing their ecosystems, which means they're choosing their partners more carefully, which means governments are deciding and so do organizations like ourselves are deciding what partners and what players do we want to play with. And finally, I think globalization is taking a flavor where we will go into a situation where we will look at being as local as possible as we go forward. So every aspect of it will need to be in terms of branding, in terms of presence, in terms of the people we have. Everything that we do will start to be a lot more local for a truly global company to be successful. Martin. Thank you for that, Jagdish. I'd love to come back maybe later in the conversation and ask you whether you think that new digital component of trade and production is going to be as open as we've experienced or whether it becomes a more partition model. But first, let's hear from Haiyan. Haiyan, what's going on? How do you interpret the signals? Are we seeing a structural shift and where are we heading with respect to globalization? Definitely, we're seeing a significant structure shift. Let me compliment a new and judicious comment with three points. First, the new normal of globalization will see the visible hands of state intervening more for two reasons. One is that, of course, globalization has been long under attack, but COVID-19 will likely widen the digital divide, deepen social divide, which tend to feed nationalism. Two, I believe a digitized global network is also more vulnerable to digital walls. More industry sectors may be deemed as national security essential. Companies with high China exposure, of course, being at the front end or back end, are particularly vulnerable to political wings. Hence, hedging against political and geopolitical risks becomes CEO's top priority. I think leaders have to spend a lot more energy and be smarter at telling the story about why going global is not only good for the company, but also good for the country. Second, the global economy will become even more multi-polar. Emerging Asia, led by China, which we have seen a very sharp, V recovery, will remain the growth engines of the global economy in the coming decade. They will continue to grow at two to three times the pace of the developed economies. By 2025, Asia's economy is quite likely to be as large as that of the North America and Europe combined, and Asia is also becoming more Asian. Thus, pivot to Asia to most of the organizations is a strategic necessity, not an option. Third, I believe that we should ride the wave of green globalization. Yesterday's global landscape was gray from the smokes of Chinese factories fed by commodities from around the world. But China now has committed to peak emission before 2030 and becoming carbon neutral by 2060. Europe has committed to carbon neutrality by 2050. India's growth likely to not follow China's energy-intensive and pollution-intensive model. United States, if U.S. still cares to set an example of being a global leader, perhaps will also jump back on the green wagon. That means that cross-border flow of green technologies and know-how, green products and services were likely also subject to less trade barriers and hence see massive growth. With that positive note, let me just stop here. Thank you for that, Hayan. I think I hear across the three sets of comments some important themes being teared up. One of them is the digital imperative, the new growth driver. Another one is the multipolar world, the possible existence of more siloed national and regional economies. Another one is the profound uncertainty that that creates, but hopefully this notice shapeability, the fact that the outcome will depend upon how we shape it. There is no passive forecast here. I wonder if we could delve into a little of those and so, Anil, digitization, clearly an enormous opportunity, but also the political football, the source of tension between America and China. Do you see digital trade being essentially free or do you see it becoming highly politicized and how does that affect the strategy, Hayan? I think, Martin, that trade was never free and it will never be free, whether it's physical or digital, because ultimately nation states governments are more powerful than companies no matter whether the company is Apple or Facebook. That said, I think I'd like to make two observations. Number one is that in terms of protecting individual privacy, I think GDPR in Europe or similar moves around the world, I think that will remain sacrosanct, that will remain paramount. However, we already see, for example, after the implementation of GDPR in Europe, is that protecting individual privacy does not mean the end of digital trade or does not mean barriers to digital trade. I think with that caveat, digital trade will remain alive and well and, in fact, be very robust. The second thing point I would like to make is that in terms of the decoupling on the digital front, that yes, indeed, there is a decoupling right in the middle of it between, say, US and China, but I would say some observers like to paint it as almost like the world is being divided into two internets, one ruled by China and one ruled by the United States. I think that's a complete and total mischaracterization, because China is about 20% of the world's population and even 30 years from now is not likely to be more than 20 to 25% of world's GDP. Therefore, it's China versus the rest of the world, and so it's 2080 or 8020 and not 5050. To that extent, yes, individual privacy protection will be paramount, but you look at US and Europe, rest of Asia, for example, there's Japan, South Korea, ASEAN, Australia, India, etc. I think digital connectivity is robust and will remain robust. Thank you, Anil. Joe, just a question for you about uncertainty which you mentioned in your response. Is it your belief that the destination of globalization is at a very uncertain stage and therefore we need to hedge our bets and become better at managing uncertainty, and if so, what are the implications of that for how multinational corporations manage themselves? Sure, Martin. Absolutely. I 100% believe that the VUCA world was never more true than what it is now, and it's probably going to be a much more frequent readiness for VUCA. The uncertainty, everything else that comes with VUCA, the volatility, complexity, ambiguity, all of that is going to exponentially keep rising, and I think businesses that need to work through this will have to be able to deal with it almost on a much more frequent basis. So if you were to talk about cycles in economy that were probably two to four years sometimes that were sort of periodic in nature, I think that period is going to be further shortened and almost to use a technology analogy, it'll be Moore's law as they do in chips is going to probably happen with the whole uncertainty part of it. And in terms of how do they deal with it, I think there are two positives that are coming out of this situation. And I just to pick up on what Anil commented on, I think absolutely governments will always have a role, whether they're large or strong or small, they'll always have a big role on deciding that country's trade. But the good part about digital trade is some of the skills and capabilities that we are looking at to build, as companies need to become a lot more agile, is going to be something that's not going to be dependent too much on flow of physical goods and people. You know, for example, today if you have to build something, you if with the connectivity and with the coming of 5G, for example, you could probably almost behave as if we haven't yet figured out how to change the time zone to all of us live in the same time zone as eastern standard time in India, the sun will still rise at different times. But the work that we are trying to do can still be done almost as seamlessly. So the biggest thing for corporations to adapt to a uncertain world that's going to probably continue and as I said, the periodicity would still keep further getting challenged is the ability to find out where your supply chain and where your resources and where your capabilities lie and what can you tap into fast in the digital world and the digital world will offer you many, many more options than today's physical world. And that's the opportunity that those industries and companies that we can already see that those industries and companies that are able to mobilize those resources and quickly change course are going to succeed, whether it's in the retail world or whether it's in the physical world of delivery products and goods with the advent of 3D with the 3D manufacturing with the advent of 5G, things are going to change very, very fast for companies to adapt. So in terms of adaptation, Jagdish, some of the observations we're talking about here might be quite expensive. For example, if I want to change from a single source in a distant location to multiple sources to hedge my risks, there is a cost associated with that. Yet you've said in a sense that the end is uncertain. So I'm wondering how do companies make pragmatic decisions about the product or the supply chains given this incredible uncertainty? How does Mahindra or other Indian companies think about that question? Very good question, Martin. I think the way to handle it is probably, yes, you do have to have single sources and multiple sources, but companies probably will those be successful that break it down into smaller and minute parts so that when you're doing a piece of work or when you're doing a unit of product that you're delivering, you are actually almost uberizing that service or uberizing the product. And so all the concepts that we're talking about, almost product as a service, software as a service will relies tremendously on the ability for organizations to be really smart. So if you work in today's model and think about creating duplicated supply chains, it will be really very, very expensive to manage that. But if you make it a model where you're able to bring it into smaller units, which can be therefore be sourced from different parts and you can still fit them in as an integrator or as someone for a better term is very good fixing the jigsaw, you will be in a good shape. And therefore ability for organizations to be really be smart enough to package these things and to be able to break it into smaller units is the key to success. So in a way it's building a lego rather than building a lego model, building the possibility of modular recombination. Absolutely. And therefore, you know, replacing something, bringing something together is got to be the fastest way that you can do it is when you've got smaller components that can be replaced rather than a bigger component that is difficult to build and replace. So Haiyan, you mentioned this multipolar world and we've seen some very extreme aspects of polarization, right? We've seen Chinese companies being essentially closed out of some technology markets. We've seen some non-Chinese companies being de facto excluded from the Chinese market. How can one play in a multipolar world to avoid becoming a victim of nationalism and polarization? What is the multipolar game? As I said earlier that, you know, whether we like it or not, the world economy will become multipolar, you know, by around 2030 China will become the largest economy in the nominal terms. So, and then as Anil and Jadish both pointed out that, you know, we're not entering a fragmented world. It's still going to be digitally integrated or connected. So, you know, if you're a company, you have no choice but mirror the world we're living in. Of course, you have to spend a lot more effort hedging against your China-related assets, but not retreating from China, not retreating from emerging Asia. I think that companies will just have to one do a very rigorous potential risk analysis, not only map out the bottlenecks of supply chains, but also identify what are the likely causes, what are the severity of the consequences, and what preventive measures and contingencies we could take. That's one. And also, you know, companies may have to follow the old Chinese saying that a shoot rabbit has three holes. You may need to build redundancy for your most critical supply chain links. Of course, you have to do so with a bit of a sensitivity to your current long-term partners. Otherwise, you may end up with a husband with two mistresses and end up losing their wife. So, there has to be a fine line of how do you cultivate that trust with your long-term supplier, but also have the redundancy for your most critical links. Now, I want to comment back on what Anil said earlier about the camp, the China camp, and the ex-China camp. I do think that the digital world has so many channels, and the exchange of data could be in a form of e-commerce, could be in a form of entertainment, could be in a form of sensors sending signals, smart gears. So, there are a lot of channels that have no military usage. Those should not be protected. There should not be digital walls. That's one. Two, I think it's very important for China to continue to build digital bridges to other developing countries. Develop countries badly, badly need digital infrastructure for e-healthcare, for e-education. So, I think that as some of the bridges may be broken for those dual use sectors, but a lot more digital channels should be open. Thank you for that. Let's think about competition because, of course, who wins not only about operational efficiency or scenarios, it's about competitive advantage. The old wave of globalization had a clear set of winners, a clear logic of winning. It was scale-intensive manufacture from the lowest-cost locations with robust level supply chains and so on. We've just said that the whole game is changing on a number of dimensions. So, I'm wondering what is the profile of a winner and a loser for a multinational corporation in the emerging new game of globalization. And Neil, what does a winner and a loser look like? Yeah. So, exactly on that. So, to pick up on something you said, Martin, and you said it correctly, which is that the old globalization was about scale-in manufacturing. And obviously, then you leverage that through imports and exports and trade and physical goods. So, yes, given multipolarity, scale-in manufacturing becomes less critical rapidly so. However, what's happening in its place is that the R&D intensity across industries is rising, digital intensity across industries is rising. So, therefore, scale-in R&D, scale-in digital platforms, that becomes powerful. So, therefore, scale still matters, but just on different dimensions. And to me, Tesla is a very good example. Tesla is a leading-edge company in many ways, but also in terms of, say, it's like a signal, a leading-edge signal of the new globalization. So, that manufacturing is going to be local for local. However, when it comes to technology, when it comes to digital services, upgrades, for example, all of those remain global. But talking about multipolarity, I mean, think about the U.S.-China trade war, and of course, now probably Cold War, that in February 2019, in the thick of this U.S.-China tensions, Elon Musk was welcomed by Li Keqiang, China's prime minister, Premier, and, in fact, presented with a token, if you will, a Chinese green card. And so, what companies like Tesla need to do is essentially think of China as another home, think of Europe as another home, think of India as another home, so that within this, as Hayan said, you need to mirror the multipolarity of the world. So, scales will still matter, it just won't be in manufacturing. But it will be in R&D, it will be in, obviously, in all the digital assets of the company, and on the multipolarity side, you need to actually think of multiple regions, if you will, as there, as your homes. You need to be a citizen there. Yeah, that's very interesting. So, it's the old, this word, multinational, we have this old word, it essentially had a nuance of operating different countries, but you're saying there's an identity component, which is being at home and being perceived to be a citizen of these different locations too. Yes, exactly. How do you do that? How do you do that? Because we all know that Apple is an American company, and Huawei is a Chinese company. How do you multinational, what is multinational I tend to do? Yes, it's also, right, right, right, right. I mean, so, you know, maybe two ways in which, so one is that you can't just be seen as a company that is quote-unquote exploiting the market opportunity. You need to be actually adding to the economy in some critical ways. Naturally, if you are in physical goods, if you produce locally what is consumed locally, that itself is seen as a major, but you know, is there a technology platform where a China, a Berlin, a London, and a Bangalore could be actually a global home base for that technology development on a worldwide basis. And then I would like to, you know, echo Richard Haas, president of the Council on Foreign Relations. He said recently in an interview, is that companies need to start thinking, if you will, that not just the business side or the business strategy side of what they do, but the public policy side. That, you know, they need to, in a sense, be partners, be in dialogue with the local governments. So those would be the ways in which you begin to see. Apple will still always be viewed as an American company, but is it viewed as only an American company? Or is it viewed also, you know, just like Elon Musk and Tesla in China? You know, it would be welcomed by Chinese Premier in February 2019 and given a green card. I mean, that says something about how Tesla has cultivated the Chinese leadership. So first we can move on to the last segment of our discussion, which is connecting all of this with transformation. So corporations are engaged in transforming themselves large-scale change efforts to catch up with digital technology, to catch up with new economic realities, to look at the new structure of the market, post COVID and so on. And I think this conversation logically should add some bullet points to that agenda. And I'd like to ask each of you, you know, what is that new transformation agenda or the, or the Delta in that transformation agenda? I think we've heard some interesting strategic comparatives about managing certainty and building multiple rabbit holes, as, as, as Hyyan said, resilience, embracing digital and so on. But what would be the, this, this sort of altered or new transformation agenda? Jagdish, any thoughts on that? Absolutely, Martin. I think, I think the new transformation agenda pulls from what we've been discussing so far as what would make winners and losers and or what would make organizations or countries successful. I think there's a three-point agenda that I think people or organizations will follow. They will have to define a new innovation and disruption framework. They will have to come up with, you know, a much shorter emphasis on startups, but with much bigger MNCs focusing on innovation to drive creation of new products, new services in its true sense. So they'll have to break up the organization in a way where it fosters innovation. And it's not about just acquisition, which seems to be the current model of, of bringing innovation into larger corporations. There are a few that have been able to do it, but most of the larger corporations seem to wait for innovation happening outside and then bring them in through, through an acquisition strategy. I think that's going to change on a new disruption framework. The second area that's going to change is primarily about becoming flexible. And I think the current model that we are talking about, which is work from anywhere, talent from anywhere, those are kind of areas where you will see a serious amount of opportunity coming together where that forms one second layer of what allows to be your corporate transformation agenda, which is a very strong issue about mindsets of managers and global leaders to be able to have talent and services being delivered from anywhere. And finally, I think one of the things that we all have realized and which will probably be the job of the new millennial in that sense to question is going to be about sustainability. And I think the question will come as becoming is sustainability as a norm? Will people start to that as part of the agenda? Your businesses will start to become a lot more sustainable. It will produce goods that are going to be a lot more sustainable and you'll provide services that are going to be a lot more sustainable. So if you make these three, and I call it we, for example, have a 343 agenda to this, and that's primarily driven by these three transformation principles, what I think will make the new world or the new businesses be more successful. Thank you. That's very clear, Jody. So innovation, flexibility and sustainability as new highlighted elements in the transformation agenda. Han, would you add any other elements to that renewed transformation agenda? I very much agree with what Anil and Jody chef said. And the new transformation agenda still need to have, I think, three elements. One is that commit to having a global mindset, don't have an isolationist mindset, don't have, don't retreat into a dark room because, you know, you may not be exposed to thunderstorm, but guess what? You know, if you lock yourself in a dark room, you also don't get fresh air. So that is very critical. I think a second is that, you know, much, I have been mentioned about, okay, building X-ray inventory to block supply chain shock, but I think it's very important to build a rich reservoir of versatile talent and capacities outside your home base. Thus, that gives you a flexibility and you need to have a base of global talent because they are the ones who are at the forefront, who can pick up remote thin signals that may not have reached you at the headquarter yet. So I think it is very important. And finally, I think that the element of optimism, because it is so easy to fall into the gloom and doom and under the cloud. And I think we all need to take a Zen approach that after thunderstorm, there will be a rainbow. Well, that's a, we are nice motivating note to end upon. But I must give the final word to Anil, anything to add, and you now have a very high bar for that strategic optimism from Haiyan. But anything to add to that to transformation agenda, Anil? Yeah. Thank you. Brilliant points by Jactesh and Haiyan. Now, I'd like to add, you know, two. So number one is that, you know, that, you know, we tend to think about in this great turbulence around us, except the days of thinking long-term are over, far from it, in fact, exact opposite. Because you see, I look at, you know, strategy is made in the context of trying to predict the future. Look at the analogy of the weather versus the climate. Trying to predict the weather accurately, even two weeks out, is close to zero. But our ability to predict the climate, even 30 years from now, is becoming better and better. Strategy has never been the art and science of betting on weather predictions. It's on predicting the climate type predictions. So therefore, companies need to believe in that, need to be smarter at bringing the future. And tactics, yes, you need to be flexible. Tomorrow could be very different from today. But if your strategy tomorrow is going to be very different from today, and that happens every day, then I think you don't know what strategy is about. Thank you for that. And just at my own note of optimism to end upon. So my profession is strategy and it's frustrating in a crisis, I think, to not know where things are going, to not have absolute certainty, to see past recipes breaking down. But the numbers are very clear that in uncertainty, there is certainly opportunity. Crisis periods sway long-term performance five times more than good times. And your probability of bogging your competitors is actually 50 to 100% times more during a crisis than it is in peacetime when things are good for everybody. And I think it comes with something said by Hayan, which is you can think about a crisis as an unfreezing, an opportunity to reshape things, to redefine things, to create new language, new institutions, new ways of doing things. I think we've heard a lot from each of the panelists on what that is in relation to the transformation agenda in relation to the changing reality of globalization. So let me just thank the panelists, Hayan, Anil and Jagdish, thank you for your insights, and I hope these have been useful for the audience. Thank you. Thank you very much.