Working Capital Conversations

As the world becomes a messier place, and as the U.S. Great Power Competition with China continues to ramp up, this battle will be fought on many fronts – few if any on an actual battlefield.Instead, these superpowers’ fight for supremacy focuses on different dimensions of power and influence – in particular, areas like business and technology, including the next generation of Artificial Intelligence applications.So who’s winning? Where does China stand – and what should other countries and companies understand to compete and win?To find out, I welcomed back a previous and incredibly interesting guest: Anindya Ghose, the Heinz Riehl Chair Professor of Business at New York University's Leonard N. Stern School of Business. Anindya is also the author of the important and engaging book, Tap: Unlocking the Mobile Economy, which has now been translated into five languages and was recently named one of the top 100 marketing books of all time. Ghose also was named to the prestigious 2019 Highly Cited Researchers list from the Web of Science Group, which recognizes the world's most influential researchers of the past decade, demonstrated by the production of multiple highly-cited papers that rank in the top 1% by citations for field and year in Web of Science.Anindya’s bottom line: While the U.S. may lead in AI research, China leads in AI implementation – they simply are doing more on commercialization and making AI an actionable part of everyday life.What’s driving this advantage? I wondered, of course, if the difference comes down to the government thumb on the scale – that China’s support for targeted industries simply gives their companies an unfair advantage. But the response I got, as you’ll hear, was: Not so fast. From Ghose’s research, the difference is more cultural in terms of consumer uptake.As he told me: “Their tech sector is clearly innovating faster, working harder, and is about 2-3 years ahead of their counterparts in the U.S. and about 5-8 years ahead from the ones in Western Europe and Southeast Asia. There is much to learn from them.”One additional note: We also explored new research Ghose has just published on The Effect of Voice AI on Consumer Purchase and Search Behavior. Given the growth of voice in tech, I promise you’ll want to hear what Anindya and his colleagues found.

As with any startup opportunity, when the serial and successful tech entrepreneur Alexander Mars decided in 2013 to tackle philanthropy, he had to identify the market gap. Turns out, he already knew it: The disconnect, as he describes, between how much we want to give and how much we actually give.The challenge, of course: How to bridge the gap. Mars’ answer: Just like a business.He gathered specialists in international development, social impact, open innovation, design thinking and technology to develop an industry-leading due diligence process to build and manage a portfolio of high impact social organizations.Beyond the intense due diligence, Epic also leverages startup and business thinking into its fundraising and donor relations, from integrating into corporations’ payroll systems to enable voluntary and automated employee giving to using virtual reality technology to bring the on-site philanthropy experiences to life.The result is Epic, a global non-profit investing in nearly 30 organizations in more than 10 countries, including groups that provide free legal and social support advocacy to abused and neglected children in New York, intervene in Mumbai’s red light areas to end intergenerational trafficking, run children’s hospice in the UK, and others.More about Epic’s CEO and Founder Alexandre Mars, who over the past 20 years has launched and sold multiple companies in the internet, mobile marketing and social media industries, as well as founding blisce/, a venture firm focused on helping entrepreneurs build mission-driven global consumer brands and technology companies.In what appears to be his spare time, the French native was named among Town & Country’s Top 50 philanthropists, and among “the 50 most influential French people” by Vanity Fair. In 2019, he was named a knight of the Legion of Honor, France’s highest civilian award order.

From gender-based pay gaps to leadership roles, advancement opportunity to corporate culture, the treatment of women in the workplace – and how to enhance growth opportunities for women executives – is and has been under continual focus.But now this focus is frequently combined with a new, and growing trend: The aging and multigenerational workforce. The numbers may surprise you: The number one growing demographic in today’s workplace is women over 55. In fact, the number of people over 55 is going to be 25% of our workforce in five years.The statistics come from Diane Flynn, Co-Founder and CEO of ReBoot Accel, accelerating the careers of women in the workplace and consulting with high-growth and Fortune 500 companies, as she puts it, “interested in creating workplaces where women thrive.”It’s also why – with companies like Airbnb, Udemy, Visa and Gap, Flynn has launched The Silicon Valley Longevity Project, which seeks to bring together companies recognizing that “How companies prepare for and respond to changing workplace demographics will have a profound influence on their ability to compete in the global marketplace and will affect the communities in which they operate.”More background: Flynn previously served as Chief Marketing Officer of GSVlabs, a marketing executive at Electronic Arts, and an associate consultant at The Boston Consulting Group. Like many professional women, she also left the workforce for a period to raise her family.So what can and should companies do? And what lessons can be learned from executives and firms who have succeeded – and from those who have failed?

If one question has driven mankind’s quest for innovation, it very well might be this: How can we get more from less?For most of our time on this planet, the answer was simple: We couldn’t. As my guest Andrew McAfee points out, for just about all of human history – particularly the Industrial Era – our prosperity has been tightly coupled to our ability to take resources from the earth. We got more from more.That tradeoff yielded incredible positive contributions in nearly every field: Technology, industry, medicine. But there’s one glaring area – one of those “aside from that, Mrs. Lincoln, how was the play” areas – where the trade wasn’t so incredibly positive. Of course, that’s the environment.As global industry rode the combination of human’s infinite ingenuity and Mother Nature’s finite resources – we all reaped the benefits. But we also saw the costs: Exponential global warming. Perhaps it’s not an exact straight line, but the connection is clear to all but a few climate deniers.Luckily, we know the solutions: Consume less; Recycle; Impose limits; Live more closely to the land.Or do we? What if, instead, these central truths of environmentalism haven’t been the force behind whatever improvements we’ve made and, more importantly, aren’t the drivers that will solve the existential task at hand: Saving the planet?Instead, as McAfee argues in his new book, the answer is dematerialization – we’re getting more output while using fewer resources. We’re getting, as his title suggests: “More from Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources – and What Happens Next.”McAfee argues that the two most important forces responsible for the change are capitalism and technological progress, the exact two forces “that came together to cause the massive increases in resource use of the Industrial Era.” Combined with two other key attributes – public awareness and responsive government – we can and do “tread ever more lightly on our planet.”Some background: Put simply, Andrew McAfee studies how digital technologies are changing the world. He is Co-Founder and Co-Director of “The MIT Initiative on the Digital Economy” and a Principal Research Scientist at the MIT Sloan School of Management. One of his previous books, with MIT colleague and sometime co-author Erik Brynjolfsson was a New York Times and Wall Street Journal top ten bestseller; his books in total have been translated into more than 15 languages; and he and Brynjolfsson are the only people named to both the Thinkers50 list of the world’s top management thinkers and the Politico 50 group of people transforming American politics.McAfee knows his prescription to save the planet is controversial. He knows it will frustrate – if not outrage – most of his friends… assuming they’re still willing to call him friend. But as us non-academics say about people like McAfee: He’s done the math. He’s researched the data. And like it or not, he’s ready for the conversation.

October 1st marks the 70th anniversary of the founding of the People’s Republic of China – the name given by Chinese Communist Party Chairman Mao Zedong in 1949. To understate the reality, a lot has happened in China over the last 70 years. The fact is, a lot has happened in China over the last 70 days – much of it unexpected, confusing, and on-going – politically and economically. Politically, of course, pro-democracy protests in Hong Kong capture global attention and concern. But so, too, does China’s economic situation, in particular, its continuing – sometimes escalating – battle with the U.S. over tariffs, intellectual property, market access, currency valuation and more… all fitting somewhat neatly under the “Great Power Competition” with the United States.   For business and public policy leaders, the question remains: How did we get here – and where do China and Chinese-U.S. relations go next? To find out, I talked with Isaac Stone Fish – a senior fellow at the Asia Society's Center on U.S.-China Relations, as well as a visiting fellow at the German Marshall Fund, Washington Post Global Opinions contributing columnist, and more. Stone Fish has studied China from the inside, having spent seven years living there. Today he continues to analyze China’s place in the world as a Truman National Security Project fellow, a non-resident senior fellow at the University of Nottingham's China Policy Institute, and an alum of the World Economic Forum Global Shaper's program.  

What happened to Facebook?Particularly in the post-2016 political campaign, the realities of data, personas and manipulation have come out into the open, from the front pages to Congressional hearings. As policymakers consider regulating companies like Facebook and Google around issues ranging from speech to monopolies, companies and consumers are thinking in new ways about the business of data privacy.The Facebook story, of course, is instructive.Among other areas, it’s a story about business models and incentives and what can happen to a company when the two don’t align with a stated mission – or, perhaps, the public good.It’s also a story about privacy, data and data portability. In other words – who owns your data, and what combination of personal, corporate and regulatory action needs to address the rules around it?It’s also a story about one of the major tensions of our time – to whom should a business be responsible? Shareholders? The community? Employees? And in a time of globalization, what responsibility does a company have within a country’s borders?It’s a story that Roger McNameehas deeply explored. McNamee has been a Silicon Valley investor for 35 years, co-founding successful funds in venture, crossover and private equity – including his most recent fund, Elevation, with U2’s Bono as a co-founder. Along the way, one of McNamee’s investments was in Facebook, where he served, in part, as a mentor to CEO Mark Zuckerberg.However, following the 2016 election – as well as the Brexit vote – McNamee decided he had seen enough. He felt that Facebook’s execution of its business model sometimes found itself at odds with a well-functioning democracy. He laid out his case in the book, “Zucked: Waking Up to the Facebook Catastrophe.”McNamee offers part history, part blueprint to the future. He not only outlines how we – and Facebook – got here, but also how we get out of this digital mess. He offers recommendations to policymakers, of course, but also to the rest of us – businesses and individuals – about how we can change the way things are done. McNamee answers the ultimate question of who has the power – Facebook or us?

For a long time in business and private equity, corporate sustainability – also known as ESG, the initials for Environmental, social and governance – was a rear guard part of the business that took front stage only when PR required.That time has most definitely passed.Today, ESG is not only front stage, but it’s often fully integrated into the deal making process – a central part of the business due diligence and on-going operations – as well as a key factor for LPs as they decide where to invest.So what does ESG mean today? How involved in the portfolio companies’ sustainability strategies should the PE firms be? And how important is it to LPs?That’s what I asked Adam Heltzer, Head of ESG & Sustainability at Partners Group, the Swiss-based private equity firm with more than $80B in assets under management. Not only does Adam oversee ESG integration throughout the investment process, but he also manages a portfolio of 150 value creation and risk mitigation projects across some 70 direct investments in private equity, infrastructure, and real estate. Previously, among other roles, Adam worked as Global Leadership Fellow at the World Economic Forum.

If you thought the battle between machines and jobs – the dislocation of labor and society resulting from digitization or automation – has been one-sided so far, just wait. The next wave of attack is well underway, and it’s called AI.  Artificial Intelligence, most simply, refers to computers that perform tasks that normally require human intelligence – things like visual perception, speech recognition, even decision-making. Earlier this year the management consulting firm McKinsey famously wrote that “25 percent of the global workforce will either need to find new professional activities by 2020 or significantly broaden their technological skills. The World Economic Forum’s “Future of Jobs Report: 2018” states, “By 2022, the skills required to perform most jobs will have shifted significantly… [and] no less than 54% of all employees will require significant re- and upskilling.” The greatest concerns are not just that AI destroys jobs, but that it increases inequality – that low-wage employees get displaced, while high-wage employees maintain or even extend their value that’s more difficult to replace with a machine. Of course, new technologies have disrupted existing processes for centuries. Steam engines. Electricity. Microprocessors. Will the experience with AI be different than with previous technologies? Most importantly, what can governments, corporations, small businesses and individual workers do to not just avoid massive disruption, but rather position themselves to take outsized advantage of the opportunities? To find out, I recently hosted an excellent roundtable discussion at Clayton, Dubilier & Rice with NYU Professor Robert Seamans. Prof. Seamans’ studies how technology and governance structures affect strategic interactions between firms, affect incentives to innovate, and ultimately shape market outcomes. Previously he served under President Obama as a Senior Economist at the White House Council of Economic Advisers. He also co-authored an important review titled, simply, “AI and the Economy,” which explored the potential impact of AI on productivity and labor, and considered the various roles for regulation around antitrust, wages, data portability, and even immigration.  

Raghuram Rajan has an unparalleled view into the social and economic consequences of globalization and their ultimate effect on our politics. Rajan’s background is extraordinary: He has served as Chief Economist at the International Monetary Fund and Head of India’s Central Bank. He’s written several books, including one that won the Financial Times-Goldman Sachs prize for best business book in 2010. Today he is the Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business. Rajan’s new book is an important must read that explains the dangerous connections among inequality, globalization and populism – and will change the way you think about the markets, government and local communities. It’s titled: The Third Pillar: How the State and Markets are leaving Communities Behind.What made this conversation so good is not just what he says, but how he tells the story. As Rajan puts it: “All economics is actually socioeconomics – all markets are embedded in a web of human relations, values and norms… Throughout history, technological phase shifts have ripped the market out of those old webs and led to violent backlashes, and to what we now call populism. Eventually, a new equilibrium is reached, but it can be ugly and messy, especially if done wrong.”

Ron Williams knows leadership. He was, after all, Chairman and CEO of Aetna. When he joined Aetna in 2001, its loss from continuing operations was $292 million, with earnings per share loss of $0.46. By the time Williams left in 2011, the company’s full-year operating earnings were $2 billion, with operating earnings per share of $5.17. Beyond the numbers, though, During Williams’ tenure, Aetna was named FORTUNE's most admired company in the Health Care: Insurance and Managed Care category for three consecutive years. Now Williams has written a book about leadership: “Learning to Lead: The Journey to Leading Yourself, Leading Others, and Leading an Organization.” However, he has also written a book about addressing many of the major gaps in society today, including the growth of inequality and the death of ethics. In fact, Williams’ argues that it’s exactly because of these times that we must renew our focus on leadership. He writes: “Our society has a greater need than ever for talented, effective leaders. Given the enormous social and economic challenges we face, organizations of every kind – for-profit businesses, nonprofit organizations, and government agencies – are desperate for people of every background with the ability to formulate a compelling vision of the future and to inspire others to help make that vision a reality.” Williams outlines the approaches one needs — lessons from his own experiences and those of people like Lucent’s Pat Russo, American Express’ Ken Chenault, Xerox’ Ursula Burns, McKinsey’s Ian Davis, and others — to grow as a leader. He acknowledges: Not everyone will become a CEO. That’s fine. Everyone still should live a life of purpose and action, and Williams outlines what he believes is the path to get there. It’s a very personal book. Williams writes about growing up on the Chicago’s South Side, the powerful influence of his parents — his father was a parking lot manager who later became a bus driver; his mom a manicurist in a neighborhood beauty parlor — and the realities of creating a path in today’s business world. He writes for kids just starting out who want to understand how to become a leader and CEOs sitting in the chair right now who want to become better leaders. More about Williams: Since Aetna, Williams has continued to help drive leadership in business, including in private equity. He as served as Operating Advisor to Clayton, Dubilier & Rice, where he is chairman of CD&R's portfolio companies  currently serves as Chairman of portfolio companies agilon health and naviHealth. He successfully guided two other CD&R portfolio company exits. His influence and experience don’t end there: Williams is the chairman and CEO of RW2 Enterprises. He is a director on multiple corporate, public sector and non-profit boards. Among many other organizations, he also is a member of the MIT Corporation, Vice Chairman of The Conference Board, and a member of the President’s Circle of National Academies.