Episode #107

Sean Pillot de Chenecey (00:04): Hello. This podcast is care of Speakers Associates, the global speaker bureau representing a select group of the world’s finest thinkers and thought leaders. Founded in 1999, today Speakers Associates operate out of nine countries and seven offices covering the UK, Europe and the Middle East. I’m Sean Pillot de Chenecey, author of the Post-Truth Business and Influencers and Revolutionaries. In this series, I interview a range of fascinating individuals proudly represented by the bureau. These change agents and industry experts give an update on their specialist areas of knowledge, and also on their motivations and viewpoints regarding the future of business. Today, I’m really excited to be talking with Howard Yu. Howard is a Lego Professor of Management and Innovation at the prestigious IMD Business School in Switzerland. The award-winning author of the best-selling Leap: How to Thrive in a World Where Everything Can Be Copied. He’s a native of Hong Kong with a doctoral degree from Harvard Business School and writes regularly for a range of titles, including Forbes, Fortune, HBR, Sloan Management Review, and the South China Morning Post. So Howard. Hello.

Howard Yu (01:22): Hello. Great to be here.

Sean Pillot de Chenecey (01:24): Absolutely. Howard, can you tell me, I mean, there’s so much that one could talk about with regards to your sort of a glittering background. But just tell me in terms of where we are now in 2020, you know, the big themes that are impacting business, the sort of things that you are talking about with your clients and with conference audiences, perhaps you can just tell us what are the things that really fascinate you at the moment?

Howard Yu (01:48): Yeah, I think there are two major themes going on in a business industry. It virtually impacting different verticals around the world. One is the speed of change that we continue to see this acceleration of technological change as well as societal shift. The other element is, the kind of confusing world we are living in now is really being pulled apart primarily because of the emergence of a fight between two superpower China and the United States. And these are the two major trends that I have observed really impact the way business leaders need to think and act accordingly.

Sean Pillot de Chenecey (02:30): And this issue that I’m sure will be on the most basic level, familiar to the entire audience, but on a very specialist area of something that you obviously have a perhaps sort of huge amount of knowledge on, where do you really see this going? Let’s say certainly in the, in the short term, so over a window over the next couple of years, how do you see things playing out?

Howard Yu (02:53): Right. So it really, depending on the vertical that business exactly find themselves end. And at IMD, for instance, we looked at keeping a very close tracking of say digitization and how to affect different industry at different speed. So the first thing we do to attend to, before we engage a client, is to understand the contacts where they’re in, for instance, are they media, are they global logistic? Are they healthcare? Or are they consumer package goods? Because as simple or ubiquitous as a trend say direct to consumer, the way it impact businesses is one at different speed. And also how it unfold in terms of the way executive needs to interpret these trend needs to have a much more nuanced understanding. Otherwise we would end up simply copying the best practices out there, which at best you become a fast follower, but rarely you can bring something unique in terms of innovation in your own space. So one key element we advise our client is to first really have a deeper understanding of the context of the industry we are in as well as compared to other sector so that we can see whatever have happened in other people’s environment can unfold into you, but also to understand what are the nuance differences are so that we can think independently and come up with action plan to capitalize the opportunity out there, as well as buffer ourself against the worst.

Sean Pillot de Chenecey (04:35): And can I ask, on exactly that point when you are giving your speeches and I’m fully aware that you, you know, travel absolutely astonishing amount when you are talking with audiences in various parts of the world, is the message you are putting across, being met with you say an equal response, no matter which part of the world you are in, or are there certain sort of, you know, parts of it where, where it lands more readily than others?

Howard Yu (05:00): Well, it is really a matter of how to customize the message to the audience so that I can create that report as well as the, almost, you kind of need to make that linkage and capture the audience attention right off the bat. So let’s pick, say, you know, talk about digitization in the banking sector, right? A Japanese traditional bank, the way they think about change is infinitely different than a bank in Singapore, for instance. Primarily because of the different regulation and policy makers, the kind of regime they put in, to what extent the regulation has happened, even though every business leader already have seen how Square and Grab or Uber and Apple is really disrupting the financial industry, but the way you make that connection with the audience is really from upfront, you spell out the core differences in their own market, but still making a case why change is important. And illustrate a path going forward, coupled with, you know, the discussion that the audience can make with their neighbor. So that is no longer just, you know, broadcast from the speaker himself or herself, but they can sense make collectively your key messages in order to craft an actionable agenda going forward. And, and that to me is always the magic and the importance for me to understand the client situation.

Sean Pillot de Chenecey (06:41): And in terms of clients, or indeed, perhaps some companies that aren’t clients, are there any examples of corporates or specific brands in a, on a business sense that you point to as examples of excellence in terms of those who are really understanding the context and the world that you are describing and are actually acting on it in a way that you think is the, is the correct way to go?

Howard Yu (07:10): Yeah. Companies that impressed me the most are ones that can think ahead, not just for the next quarter and the next year, but really thinking about the strategic direction where the company needs to go in the next 5, 7, 8 years, and back with real commitment in terms of resource allocation, initiative being launched, stuff that they will stop doing when accelerating commitment in new initiative. So I’ll give you a couple of example in the manufacturing sector, for instance, in the consumer package goods industry. I had a pleasure working with Mars Petcare. So, which is the largest pet food manufacturer in the world today. But the way they think about it is given the emergence of small brand in consumer package goods industry, not in their direct sector yet, but they are curious enough to look at, let’s say food and beverages and craft beers, emergence in stealing share from large brand, all the way to laundry detergent, disposable diapers.

Howard Yu (08:20): The small brand are emerging quite strongly, as well as the digital native, the dollar shaped club of the world, the Harrys of the world. Which create this impetus for Mars Petcare to think beyond of selling dog food. If we change our vision away from just producing high quality, dark food, into making the next generation of pet owners more aspirational, what type of new product services direct to consumer marketing or the way to subscription model and leveraging the ecosystem, launching mobile app, all of these becomes a large playing field. So what I did with them together with colleagues of mine is essentially give them a holistic pictures of what’s going on around the world so that they can identify the size, big shift that they must leverage in their own sector. We also create a holistic immersive experience taking participant around the world, connecting them with entrepreneurs across different sectors and industry so that they can back it out a little bit and make sense of these world by themselves, guided by our input, obviously, and that coalesce into a set of initiative, translate to organization commitment to make change actually happened. So the most rewarding aspect of my work, I guess, is going beyond just, you know, flying in and doing a gas lecture. But also instating a change momentum, whether it is getting managers across levels and function to challenge the existing paradigm or through much more in depth ongoing intervention. So that to close what I call the knowing doing gap.

Sean Pillot de Chenecey (10:16): Very interesting. Can I ask, you mentioned that point about change momentum and just in terms of, you know, your own, you know, personal sort of a history, what about you in terms of, you know, was there a particular I’m aware that you, you were in the banking sector in Hong Kong before you set up independently.

Howard Yu (10:34): Right.

Sean Pillot de Chenecey (10:34): So, so was there a particular moment when, when you, you know, did you have a sort of a, was there a catalyst that suddenly sort of hit you and you thought, wow, this is where it’s going, I’ve gotta change, or I’ve gotta sort of go onto the next stage. And what happened that made you made you? Give the fact the big leap in terms of, linking with your book title.

Howard Yu (10:54): Well, thank you. I remember, well, before I enter academia, I was working as, an executive in the banking sector, Standard Charter Bank, as well as Citibank at the time. And I remember I get so frustrated by the inability for the large bank to launch a new business. At that time, across the banking sector, I think the matrix organization is still in full range. Bank after bank are launching a new organization structure, they call matrix and everyone complain. And yet practically all the bank are moving in the same direction. And I’ve seen the, not just the toll on the impact on new innovation, but also the human toes as well. Caused onto employees. And so I decided to study at the time organizational design, I want to understand why organization after organization would adopt a structure an organization design that seemingly doesn’t work.

Howard Yu (12:03): And this is when I get launched into Harvard Business School and embark on my PhD. But very quickly I discovered a real question to ask is why organization find it so hard to sustain new growth? Because in the end, the reason people keep on changing organization structure, the reason companies are pushed to embark on expensive M and A for instance. Oftentimes the root cause is to sustain new growth on a long term basis. So that becomes the dissertation topic that I got. And at that moment, I was truly privileged to have the opportunity to work with the late Clayton Christensen who just passed away earlier last week. And that really shaped my thinking in terms of management practice and management theory.

Sean Pillot de Chenecey (12:58): Wow. And can I ask, and what were, were your impressions of the late Mr. Christensen?

Howard Yu (13:05): You know, among academia, there are many professors can provide a lot of answers, but not a lot of us. In fact, only few of us were able to ask the right question. And Clay is just the person. If you are looking back into the 30 years of work that he did, he managed to ask the most potent question of our time. The most potent question being, how come well run organization, high performing organization, systematically would fumble in the face of the technologies that look seemingly simple? How come big organization with all the resources and know how in political willpower, they continue to seed it, their market position to new entrance, the scrappy upstart? And he asked those set of questions before anyone else would. And as a result, I think he shaped generation of scholars, managers, and executive to navigate what we now see as disruptive innovation. Ubiquitous around us. And in a way I think his biggest legacy is help us with a set of language to see the world differently.

Sean Pillot de Chenecey (14:21): That is such a, yeah, I know he’s such, obviously, it’s different to sort of think of a sort of phrase large enough to sort of describe him in business terms, but, wasn’t an absolute astonishing figure. Okay. So what about, so, what about in terms of how you see things playing at across sectors I’m interested in. So, I mean, are there particular sectors that again, that get this change or these changes more than others? So again, you mentioned, you know, obviously the banking world and the fascinating differences between, you know, the Japanese ethos and the Singapore in ethos. And I grew up in Singapore and myself, oddly enough. Right. But, I mean, are there other sectors that, again, get this, or is it more of a, of an individual brand or corporate thing, you know, are there sector similarities or are, is everyone acting in isolation?

Howard Yu (15:18): Right. Right. So it’s not so much around the sectorial differences. In fact, it’s within the sector, I observe there are companies that get it, and there are companies, despite they pretend they get it based on the letters to shareholders. When you looked at the product launch pipeline, the way they allocate corporate resources, they continue to pretty much around business as usual. So there is a gap between what you do and what you say. And so the realization came about because after I launched a book leap, I tried to quantify across sector, which companies within a one vertical are really leap towards a new knowledge discipline versus the rest of the companies. They continue to get trapped and stuck with their own knowledge principle. So for instance, right, beyond just banking and beyond just consumer package goods, we mentioned, you can think about the global automotives industry.

Howard Yu (16:25): That practically all the auto makers are trying to become more like Tesla. They all talk about electric vehicle. They all talk about investment in autonomous driving capabilities. So whether you are VW or BMW or Toyota, in fact so much so today, if you swap about the annual report, they all talk about the same thing. You get countries who’s who’s and report these are. So as a research methodologies to generate insight for practitioners at IMD, what I ask for is to rank these company, which one are really well prepared for that new future? A future that with cars that are no longer manufactured by manufacturer, but much more of a ride sharing scheme require autonomous vehicle, probably a hybrid, if not completely EV so from that angle, you, of course, Tesla would be well positioned for that future. And that in part explained the valuation of this company, surpassing GM and Ford, even though the number of cars, so is much smaller than any of these profitable OEM, but I was more concerned between the incumbent.

Howard Yu (17:43): Is that GM more prepared? Is that Toyota more prepared or BMW? Are there early incumbent that try early to launch an EV like BMW i or either Lyft by Nissan? But then fumble later on and why, and are there latecomer that played with bankruptcy for years until they get a new CEO, an external, and then took off such as GM. And I want to understand the human drama behind, because by understanding the human drama, then I can extrapolate lesson and learn to advise executive again. If you want to truly move the organization to become prepared for that uncertain future, here are 1, 2, 3 principle you need to think about as extracted from these industry, both at the organizational level, whether it is tying to the capital agenda in terms of the funding source, whether it is dealing with your ecosystem, how do you see competition as friendnemy sometimes you need to work together.

Howard Yu (18:45): Sometimes you need to compete against each other. All the ways to individual behavior, how to ensure yourself can really expand that innovation aperture so that you remain externally curious as well as engaging in difficult conversation when the skill set of your management team or your own team at the mid level is limited. How do you turn the team profile so that you bring that diversity? Diverse thinking, cognitive diversity beyond gender and race and religion, but it’s cognitive diversity that are the sort of principle that we are able to extract across industry to tell executive, if we want to stay on top of competition in the next five to seven years, these are the tangible steps that we need to think about. And this is not just hand waving.

Sean Pillot de Chenecey (19:43): Yeah. Yeah.

Howard Yu (19:43): In fact, through deep evidence research, here are some of the key lesson learned. And of course, in terms of poeticology, one can do case studies. One can do war game, one could use computer simulation to keep it interactive, but the key insight are really rooted in scientific research.

Sean Pillot de Chenecey (20:04): How fascinating. Could I ask us in a completely different sector? So if we look at Silicon Valley and you mentioned, and I know one of the people that you work with, one of the many companies in Asia, obviously a 10 cent. So one of the things that is often spoken about is that, you know, Silicon Valley that was renowned for its innovation has in many people’s eyes, you know, there’s a common phrase, used a lot of business events, which is, we’ve seen nothing genuinely new out of Silicon valley in a long time now. And actually what’s going on with the Asian tech brands is far more dynamic, hence things like the Asian financial services sector. I wonder where you stand on on that argument. Well, yeah, what’s your perspective on, you know, how have, you know, is the accusation that Facebook have brought up everything around them? Yeah. And by doing so they’ve killed innovation. Is that a true statement? Is something you agree with or not?

Howard Yu (20:59): Yeah. Yeah. I mean, if one looked at the long term trend of Silicon Valley, the number of startup build essentially have dropped, which is quite alarming. And also the number of startup being purchased by existing company, whether it’s tech giant or existing firms went up, meaning a lot of innovation got snatched by big incumbent. So that is empirically true. And that cause worries among academic, as well as policy makers. Now, on the other side, what we are seeing right now, you brought up Tenzan and one could think about, and financial by Alibaba and the emergence of a new type of 5g network potentially led by Huawei. What we are seeing essentially is technological trajectory no longer monopolized by Silicon Valley. Now, historically whether it’s computer mobile phone or all the way to GPS standard and telecom, 4g and 3g, it’s a global standard.

Howard Yu (22:05): It came out from California.

Sean Pillot de Chenecey (22:06): Yeah. yeah.

Howard Yu (22:07): You know, undoubtedly, what we are seeing now is there seems to be strong enough of evidence to suggest the world of internet will split going forward all the way to the basic foundational technology at the component level. The current crackdown on Huawei and the ongoing rhetoric by the US administration only would accelerate such a change. Now, so what does it mean to non IT executive, right?. Whether you are in Europe or whether you are in the US or China, if you’re not in it, what does that mean? It means that we have to pay attention on both, because quite frankly, for non-IT industry, I don’t think one can afford to seed market leadership either way.

Sean Pillot de Chenecey (22:56): Yeah.

Howard Yu (22:56): If you are a car company, again, you have to sell both in the Western world, as well as China. But then from 5g to connected car technologies, to autonomous driving, probably the technological roadmap would differ between the west and the east.

Howard Yu (23:15): That only goes to show the ability to hold on two model, two mental model on our mind and understand the pros and cons of each, become more and more important. So it’s no longer sufficient to conduct a Silicon Valley digital safari nor is sufficient just to immerse yourself in schengen. And think about all these wonderful eCommerce happen in China will dominate the world with the same standard. It’s simply not that simple. One is to go both east and west in order to extract the core principle, so that we are not making mistake going forward.

Sean Pillot de Chenecey (23:57): Yeah. Yeah. How interesting. Okay. Howard just asking another couple of questions in a time we have, I mean, I’m, you know, here in a studio in London and I believe you are in New York, obviously is you are on the book tour, aren’t you? You’re a

Howard Yu (24:12): Yeah, that’s right.

Sean Pillot de Chenecey (24:13): Fantastic.

Howard Yu (24:13): So today is a little bit of media activities in New York City. And last week, I was in Tokyo to prepare the book launch of the Leap in the Japanese version and a few days before I was in Taipei as well.

Sean Pillot de Chenecey (24:28): And so what’s coming up for you, what’s in the, how long is this tour going on or, what’s in your short term calendar?

Howard Yu (24:36): Yeah, the short term calendar is really, I kind of mention about the ranking and comparison across different sector. And what we are doing right now is both expanding different vertical. Right now, we are pretty much covering five, six different industry. We want to continue to expand to new sector. As well as going back to history, right? Because the thing about executive and human being in general, we tend to forget recent past. And so tracing back the rise and fall and not just the snapshot of today becomes very, very important. Particularly say earning announcement is coming out this coming week for visa, MasterCard. And later on will be for UPS. And it’s not enough just to looking at the ranking of today, but one needs to understand where they’re coming from? Because for whatever the goods and the ills of the top management team, a lot of the key decision are premade a few years ago.

Howard Yu (25:37): And so as academic research to give, you know, good recommendation to practicing manager, we have to go back and illustrate identify what are some of the key choices a company have made in their time in history that unfolding can explain of today’s outcome. This is how we learn after all. And so this is my focus in terms of the research agenda. And when I engage in media is a lot to do with, based on earning announcement, based on the latest product launch. How do we make sense of these? Does it tie with this history? How much is the freedom degree of freedom that a CEO or company can have in shaping their environment? And how much it really, depending on the macroeconomic outlook, as well as policymaker in terms of regulations?

Sean Pillot de Chenecey (26:28): It’s superb. Okay. Howard in that case, just the last thing I’d like to ask you. And I, you’re such a high profile individual. I can’t really believe there’s anyone out there who isn’t, sort of, familiar with you, but let’s just presume there is somewhere. So, in terms of the, you know, the global, sort of client base that Speakers Associates have. So, you know, wherever someone’s listening to this podcast, be it in, you know, China or Australia or whatever in Germany, let’s say. Just so that they’re absolutely crystal clear about exactly why it is that they should be booking you to come and absolutely, you know, stunned their audience with your insights, perhaps just at, just giving us a couple of minutes on, precisely what it is that you’d be talking about at a convention or Congress during the rest of 2020 or early 21.

Howard Yu (27:21): Yeah. So my focus has always been around how large company can sustain new growth. So that’s the kernel of all the research and speaking topic. Underneath I usually would work with the client to identify what are some of the key themes they want me to talk about? Number one would be quite usual is, what’s changing around us to bring executive, to embrace this outside in thinking to challenge the existing paradigm so that we could even look at the technological change, the societal change, the emergence or platform The second topic I tend to work with executive on keynote speech would be, you know, the area around generating consumer and user and customer insight. How do you change and leverage customer insight into organized action?

Howard Yu (28:21): So a lot of the company thinks they are good in understanding their user need, but turns out there are so much more one can do to exploit that knowledge base in order to create more value for the enterprise. The third element that I tended to work with executive a lot is around managing that strategy process. It’s not so much just around strategic insight, but is how do you pull the level of an organization so that the resource allocation can actually be backed up your strategic plan? How do you instigate large scale change so that we don’t fumble like Polaroid or Kodak or Blockbuster that sit on insight without organization? The last element that I work lately quite a bit is how can Western firm, for instance, to win back in China. And China is a metaphor for these companies because sometimes China may not represent a huge market today, but the way that innovation coming out earlier we talk about could have a huge implication going forward for other frontier economy, whether it’s Vietnam or Mexico or Africa that could represent a future market for this core firm to consider.

Howard Yu (29:43): So when China’s gonna grow big, how they gonna shape this frontier economy would be a discussion. One needs to think about. And then I guess the last topic is, would be much more experiential, that we could talk about how individual manager, when they need to embrace change, what kind of mentality one needs to apply all the way to the concrete behavior. For instance, when you engage upwards to talk and sell your own big idea, how do we approach this issue? So that as an organization can be much more evidence based driven rather than opinion based decision making, sort of the hippo, right? The highest papers and so opinion. How can we overcome some of these organization dynamic? So these would be the five broad topic that I could cover, and it really all wrap around the concept of leap. How can one thrive in a world when everything can be copied, that knowledge can easily exchange capital, can easily exchange across border and even talent can move across industry. It’s in this world of accelerated change. How can organizations stay on top of competition over decades and even centuries?

Sean Pillot de Chenecey (31:00): Absolutely amazing. Well, Howard Yu, one of the world’s top 40 business professors under 40 and award-winning author. Thank you so much for sparing the time to talk with this is absolutely fascinating.

Howard Yu (31:16): Thank you so much. Great to be here.

Sean Pillot de Chenecey (31:21): Thank you for listening to The Speakers Show Podcast. Please leave a rating on iTunes. We’d really appreciate it. And also be great if you could subscribe to the podcast itself. You’ll find it also on Google podcasts, SoundCloud, or your favorite podcast app. Thank you.