 Hello everyone, thank you very much for coming and welcome to the annual meeting of the new champions in Dalyan, China, where the theme or the overall theme of the meeting is inclusive growth in the fourth industrial revolution. This session is filmed and webcast live and this is a press conference with Hydroconstrugals who are presenting findings from their new report. The title of this is Disruption Ahead and we're asking how well are Asia's businesses using talent and organisational capabilities to respond to market shocks. My name is Max Hall and I'm joined on my fire left by Linda Zhang, who's partner in charge in China at Hydroconstrugals. Steve Molina, who's regional leader of Asia Pacific and George Wang, also partner in charge at Hydroconstrugals. We will speak for about 15-20 minutes and if time allows we can have some questions from the floor. Linda, thank you very much for coming. Can you just outline some of the key findings of the report? Sure, well thank you Max and thank you all for joining us today at the press conference. Hydroconstrugals is a world leader in leadership advisory services focusing on top executives in the market. In 2016 we as a firm assessed about 500 most valued companies in the market and we identified top 25 as what we called super accelerators. With that background early this year we did another survey with about 600 executives in Asia Pacific market, asking them to rating their performance against the disruption forces they are facing in the market and how their companies are performing and addressing those challenges. So here are the three key findings. First, over 80% of the respondents all agreed that their companies are facing more and more disruptive forces in the market. Second, while there are more and more disruptions in the market, over 50% of the respondents agreed that their companies are not the initiator of the disruption forces. And the third, only about 40% of the participants of the survey addressed that their companies are well prepared for the challenges. So how could companies address those challenges? I'll turn that to Steve. Thanks Linda. So welcome everybody, it's a pleasure to be here. Just before I jump into the findings of the survey I think it's important to provide just a little bit of backdrop as to the methodology that was deployed during the survey. Hydrix spent about four years developing what we call the super accelerators which are the top 25 performing companies in the world. The criteria that we used for identifying those companies was one, who are those top companies that fall into the top 20% growth rate in revenue in the world of those companies which actually grow their revenue through no less than 20% in organic growth. So in other words, those that have grown their business through 80% organic growth. Also we used the filter which said that we had to screen out those that had more than 20% of their growth funded through government support, home government support. The fourth criteria was more or less focused on during that growth period that the profitability margin shouldn't drop more than by 20% because you don't want companies to be buying growth. So when we put it across Linda said that the Fortune 1000 companies, we ended up identifying only 25 companies that met that criteria. Interestingly enough, there's four of those companies that are in China. So Ping An, NetEase, Tencent, Alibaba. We also find the TSMC from Taiwan and also Sun Hongkai from Hong Kong, so six of the 25. 16 are from the US, six are from China and then the others are just sporadic made up with a couple from India and one or two other smaller geographies. So China's had a very impressive result to date. So when we looked at those companies at the leadership attributes, particularly those attributes that deal with disruption and the fourth industrial revolution, we came out with some very interesting findings. There were about 39 variables and attributes that related to the executives that were leading those companies. We then rolled those variables up under our proprietary formula framework called Meta. Meta stands for mobilising, executing and transforming with agility. So this is the backdrop to how we rolled up the data from the respondents in our survey to present our findings. So if we look at those findings, we see that in Asia and particular China, they're very strong on the ability to mobilise a business. Mobilising a business means creating a mission and purpose enabling that winning the hearts and minds of the people on the organisation's goals. And that then translates into a very high rating of 74% in terms of the quality of their services and products. So that's a real plus, was a very interesting finding. However, when we look at execution, it was the weakest score. So when we looked at Asian companies and particularly Chinese companies, they all rated themselves as weak on execution. So execution in this sense means their ability to attract and retain and develop talent. And secondly, it's the organisational structure. Is the complexity so difficult that it's hard for them to navigate effectively and create value through that structure for the business? So interestingly enough, the scores, that was the lowest score in our survey. Only 42% of respondents felt they had competent execution capability. When we looked at the ability called transforming, transforming is basically changing the mindset of the organisation, which is fundamentally how you then allocate resources in the organisation, particularly key resources such as ideas, technology, capital and people. Now this is important when we look at the fourth industrial revolution and disruption, because unless you can align those resources to capture those opportunities and then bend that back into the type of talent you want for the future, you will find yourself lagging behind your key competitors. The final component is agility. But having said that before I go into agility, most people rated themselves strongly. 68% of respondents rated themselves as strong on that. I'm laughing because there's a little contradiction I'll get to in a minute. On the agility side of things, we found that organisations also rated themselves as quite weak. Now agility is the ability to look into the future to identify opportunities and threats and to deal with short-term setbacks. So the reason I laugh before, I apologise for being a bit flippant, is because they rated themselves very weak on there, but they had quite a high rating on their ability, their transformational skill sets, and there is a little bit of a contradiction there. So the takeaway from the results for us has been, you know, it's not surprising that Asian companies do particularly well because of their org structures, because they have bold vision-aligned purpose particularly well to grab opportunities. They're generally moving a lot faster than their peer group, so there's this lag factor in terms of matching the right talent to organisational purpose. The ability to transform was very interesting, rating themselves quite high in that regard, in terms of ability to align capital ideas technology, which I think they tend to do particularly well in the Asian region, but on the agility point, not so strong in terms of really identifying the future market opportunities and dealing with short-term setbacks. So that was the findings and I'd probably like to hand over to my colleague now to take us through the technology component of that story. George, what can companies do best to, I guess, prepare for technological disruption? Thank you, Max. So I think it's based on the findings that continue on what Steve and Linda was just talking about. Based on the findings, the top three factors that give the confidence to the executives in the APAC region that their companies and their own organisations are ready for this kind of disruptions are. First one is the type of people they have. They feel that people have a good learning agility to ready to learn new things, especially the industrial 4.0 or that new technology innovation, everything, so they're ready. That's one. Second one is they feel they understand the market needs, client needs, so the organisation cannot be reactive, they're proactively to looking ahead. And third thing is they feel that their ability to change the direction of the strategy, they can do it quickly. And when you look at that, those top three factors, they're very much in line with what Steve just described. What they're missing part is the execution. The execution, as Steve was saying, the findings we found is a little bit weak, and that's where it's important. A lot of things, very externally, they're looking at the market, they understand the market, they understand the change. But sometimes also we need internally looking how to execute the strategy as well. We'll go to questions on the floor in a bit, so if we could have the microphones ready and if you have questions, please do ask and you can ask in Chinese or English because we have the translation headsets. George, and maybe actually to everyone, are there any particular skills that you see, I think you've talked generally about the types of skillsets, but can we just be a bit more specific, I guess, on the particular skills that you see people need or the particular two questions really? What are the skills that are lacking and what are the skills that people need? I would say, if I look at the future, there's another interesting statistic that says by 2025, 230 of the Fortune 500 companies are going to be based in emerging markets, which is a major power shift in the global economic hierarchy. So I think there's three things of a CEO that the future needs to address. I think one is they have to have a global mindset. I think in the future if an executive doesn't have experience in both growth markets, emerging markets and mature markets and substantial hands-on experience in those markets, they probably won't qualify for a global CEO position. Secondly, I think the whole impact of the fourth industrial revolution is going to democratise and delay a lot of organisational complexity. I think the role of the CEO will be more focused on having much more enhanced geopolitical skills to navigate that terrain as those assets are distributed around the world. The final thing, the third thing, is I think they have to be significantly more agile and adaptable because the world is going to change. When you think that the culture, the governance, the legal issues, the market dynamics of these other 230 emerging market Fortune 500 companies is significantly different from the Western Anglo-Saxon sort of a view of multi-nations today. There's going to be a different gameplay. That agility and that adaptability for CEOs is going to be tantamount. I'll add on to that. I think as George mentioned, execution actually comes up as a capability gap, which is a little bit surprising, but if we look at how dynamic the market is today in the China market and also if you look at the speed the market is going, the capability of really understanding where the market is going and come up with an organisation that's agile enough to respond to that change and also have the capability of executing all the strategy you laid out for the new market situation is extremely critical and important. So I think that's probably adding on to that point. Just to add one more thing in addition to our rest of my colleagues. I think when you look at a CEO or executive in a company, one of the competency you probably want to add is also technology savvy, giving the other industry 4.0 what's going on, data analytics, big data cloud. So all the CEOs are coming in, you've got to have some technology background or understanding of where the technology is going. That's very important and stuff we do working with our clients around the world, you can see these type of profiles has been changed. Give you an example, used to be chief marketing officer for a Fortune 100 company, branding is important, not branding experience is important. Now you've got to add big data analytics, those skills that technology savvy is important as well. Do people have these skills? Because there was an interesting comment in one of the press conferences we had yesterday where I think if I remember correctly there were in the so-called dark ages there were more people who could read and write than a percentage of the human population could read. There was a higher percentage of the human population that could read and write then than there is the number of people who can program a computer now in terms of population. Are you seeing, I mean a question for all of you, are you seeing that people have those hard technological skills, those data skills? I don't think they necessarily have at the moment. There's been a statistic that's often quoted in the arena that says there will be potentially 49% of all the workforce may be made redundant by the impact of automation and technology. But there are contrary studies that say that by 225, 230, or actually because of the global demographics there will still be a surplus even with the impact of technology. So it's one of these questions that's very hard to answer, but I think we can say this that at the low end of the spectrum, which is low skilled, low education, there's going to be a significant dislocation of the workforce and that's not something to look forward to. On the flip side the technologies that come in, automation, machine learning, cognitive computing, AI, they're going to create a virtual range of new industries that people that are actually highly skilled and more educated will be a much larger segment of the population that probably exists today. Now I can give you a specific example of that. If you look at agriculture you see that there's aerospace companies now investing heavily in satellite imagery to do farm management and they're also partnering with drone companies that do soil testing to look at irrigation flows and wind patterns and crop formations. So the manual labour that used to go into the field will be replaced by this so there'll be a large section of manual labour in various parts of the world that will not have work but there'll be a whole new industry created that's now serving this from a technological side. So this is a dislocation, it's not going to open overnight so I don't think people need to be too panicky but if you're a CEO and you don't foster that culture of innovation and identifying those skills and capabilities for the future then technically you may lag your competitors. Also if we talk about the consumer industry I think one part a lot of the players today is looking at is how to engage the younger generation of consumers or the millennials. What is really their hotspot? What attracts them? How you increase the consumer experience with them? What are some of the touching points along the whole value chain of the business that enhance the consumer experience especially connecting with the younger generation of consumers? You don't want a brand to be associated with your parents or your mum's generation. So that's also something that a lot of players are looking at how to engage the younger generation. Consumers on the other hand is also the workforce the millennials coming to the workforce how we motivate this generation of the people coming to the organisation is also one of the key talents going forward important for the senior executives. George? Yeah my comments is that you're looking at all that technology you're asking whether or not these people there but I look at it is when you have a new technology like auto autonomous driving, robotics it's all about building that ecosystem so it will take a time, gradual, evaluation evaluation of getting people ready. So I think when you look at these industries there are people already getting there right analytics people, big data people universities are behind it so I think people are stuck anyway. Do we have any questions? There's a gentleman here. Can we get a microphone to him? A question for Chinese companies going global we have learned a lot of cases but they've encountered with a lot of obstacles and the issues especially related to the cultural and institutional conflicts in the local markets what is your perspective on this point and what are the industries that in the biggest need for talent? Take that question, I mean I guess the industry that Chinese companies we work, hydro struggles work with a lot of Chinese POEs as they globalise their business around the world and when they step out of China I think most Chinese companies they are doing very well they try to understand understand that each country has its own culture its laws and they try to adapt to it so I can give you an example a lot of our work, like my work and Linda's work and Steve's work we're looking at for example let's say even a handset device you're selling handsets into a different country they have different privacy laws different consumer laws to protect the clients and we are actually doing work for these clients in China to hide those privacy experts to help them to integrate this product into their respective markets and when you see an issue sometimes in the media in western Europe or western media you're going to see sometimes a growing ping you may see an issue but that's part of a growing ping I would definitely add on to that well, can I change to Mandarin? Yes, please do Since you asked in Chinese I will speak Chinese it's just a process I think like many foreign companies when they enter the Chinese market they had their learning curve too so for Chinese companies it's just a natural process just like Mr Huang said we are moving forward by big steps and make a lot of progress so we need to recognise that many great Chinese entrepreneurs already realised understand that we cannot neglect the laws and regulations in the local markets that is why as a high end head hunting company we are now helping many Chinese companies going global by hiring local talents for those companies and it's not restricted to the Chinese community in the local markets but also like the local talents so I would not to worry some about this trend and I think Chinese people are very good at learning new stuff and of course there will be failures and difficulties when they go global but we do see a lot of progress and achievements and we are very confident that we are able to help Chinese companies to do that better build on what Landers said two weeks ago on the Yahoo Finance website an article says that there are seven most valuable companies in the world and two are Chinese companies Alibaba and Tencent the rest companies like Facebook, Google, Amazon so they create a word for this phenomenon that is the F-A-N-G company they are the most valuable companies across the world and among the seven two come from China which is very incredible we have maybe one or two minutes left I have a question sorry did you have a question? okay I have a question myself you were talking earlier about the skills that were needed and the ecosystem do you think in China that the ecosystem is there also in the rest of Asia Pacific? on technology side on artificial intelligence all that stuff we have done quite a bit of research of our team in China I think China is ready building up that ecosystem for example artificial intelligence artificial intelligence it's really people talking about it's already at the inflection that this is going to take off but the basis of artificial intelligence is about deeper learning so a lot of mathematics and algorithm calculations and China has one of the countries that produces the most best students in mathematics and everything in our research we have done recently research back home China is going to produce more those types of deep learning algorithm calculations than anybody in the world but it's not now but it's accumulation over the time I can just add something to that George in fact back in the 70s China's emergence as a major technological player was already predicted that people are familiar with Alvin Toffler's third wave George was very heavily influenced by some of Alvin's writings he said that China had the advantage to jump the industrial revolution and go straight into the socio-technological order fourth industrial revolution because they don't have legacy infrastructure like you would in the US with wireline versus wireless secondly China's got the advantage of super scale this market allows companies that first move advantage to experiment like no other market in the world where you have legacy infrastructure and much more competitors so the first movers in China whether it's Tencent, Alibaba or any of these other players they have the opportunity to super scale a bigger market experiment and they don't carry legacy systems into the fourth industrial revolution so China's sort of uniquely positioned in this regard relative to a lot of other markets I think China's biggest challenge in the future when you benchmark say Shenzhen against say Silicon Valley China's got to do a little bit more to make China a place to attract world class talent because that's what made Silicon Valley it wasn't American ingenuity it was global ingenuity that relocated to Silicon Valley and if China wants to really compete that's my challenge for China into the future I think adding on to what Steve mentioned when he was talking about the consumer scale when he was talking about the technology and if I don't know Max have you used your mobile if you go out into now this into China you don't need a wallet if you have a mobile you can pretty much go pay anything you can go to the restaurant, you can go to a store you can go to the hotel anything can go be paid by your mobile we're a bit slower in Europe on that a lot of my US European colleagues they were amazed by this and they really love this they were definitely advanced in this scale and so I think definitely there are and just to add one more point I think the foundation of doing all these new technology like big data AI is there like Linda and Steve saying the challenges for China besides Steve was saying he has a great point how do you attract top talent to China and the other thing is application how do you create application for AI those things are in the US silicon value very very strong so how as a China as a country to create environment for those top talent coming here create these applications not just the technical know how thank you very much thank you Max thanks a lot