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our our guest today is mauro gen
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director of the lauder institute and we
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are going to talk to him about how
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companies can leverage global trends to
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expand their business
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uh mauro thank you so much for joining
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us today thank you for having me well
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let's imagine that we have here with us
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a group of
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executives from multinational
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corporations
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what are some of the most important
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global trends that they should be paying
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attention to
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because of the potential impact that
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they can have on their business
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well i think there are several of these
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trends and of course all of these trends
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can be seen as
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threats uh on some level but i think
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they actually represent major
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opportunities we've seen for example
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major trends in terms of population
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shifts around the world the centers of
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gravity of the global economy are
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shifting away from europe and the united
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states and japan and towards the
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emerging economies that's where the
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markets of the future will be that's
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where the middle class of the future
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will be and then
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hence consumer markets are going to be
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gravitating towards those parts of the
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world we also see trends in terms of
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geopolitics where the risks are where
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the natural resources are in the world
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and so on and so forth and finally i
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think we are seeing very important
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financial trends uh we're seeing that
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certain countries in the world are
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accumulating more and more reserves
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they're accumulating more and more
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firepower for
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the future and therefore that's going to
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bring about i think realignments in
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currencies around the world and as a
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result of those shifts
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companies will need to change the
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structure of their operations right so
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this is a great group of topics that
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you've laid out
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why don't we start with the first one
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you mentioned which is the
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uh demographics so i i know that in some
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other context you refer to the fact that
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this is probably the first time in the
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uh in in rece in history that you have
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more grandparents than grandchildren
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what are the consequences of the aging
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population
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and how does this affect
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say a banks or other companies
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products and services
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well you're exactly right population
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aging is a very important phenomenon
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that has been going on for the last 20
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years but i think at this time and
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moving forward into the next five or ten
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years is going to essentially reach
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critical levels for banks for example
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what this means is that they're going to
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find it harder to attract deposits and
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remember that deposits are the easiest
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way and the cheapest way for banks to
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get funding
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so banks are going to have to look for
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alternative sources of funding precisely
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at a time by the way when regulators are
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asking them to maintain higher capital
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ratios
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also the kinds of products that banks
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sell to customers are going to have to
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change as a result of
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older populations around the world they
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will need other kinds of investment
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products they will need other kinds of
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savings products
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and so on and so forth but companies in
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general in any industry will have to
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watch this strength towards population
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aging very carefully and once again i
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think there are some threats some
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companies will see
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business lines shrink their markets
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disappear but at the same time these
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demographic trends also create new
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opportunities that can be measured in my
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view in the hundreds of billions of
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dollars so what's the example of a new
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opportunity that has been created either
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for a bank or some other company
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because of this aging population well i
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think for banks new types of financial
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products such as reverse mortgages
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or also investment products with a
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downside protection
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are now so much more popular
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because we have more customers of banks
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that happen to be in their 60s or their
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70s or the 80s
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and for companies i think any type of
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product that has to do or service that
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has to do with the so-called leisure
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industries so in other words people in
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the 60s or 70s or 80s
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many of them retire they have more time
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and
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they would like to use that time
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productively
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so as a result of that i think there's
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huge opportunities for launching new
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products and services
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that essentially keep people busy in
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retirement
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right so so for example would you say
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that industries like travel and tourism
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for example may see an increase because
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of what you just said absolutely and in
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particular i think certain segments
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within the tourism industry are going to
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grow for example cultural tourism
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so given that uh today uh grandparents
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in the world are actually much better
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educated than let's say 20 or 40 or 60
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years ago i think the tourism industry
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and the leisure industry needs to move
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away from just you know beach and sun
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and towards cultural tourism for example
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for example
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so what about industries like say
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healthcare or real estate how can they
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come up with products and services aimed
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at an older demographic well healthcare
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obviously will go through a
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you know very rapid growth in many parts
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of the world especially in emerging
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economies let's not forget that
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population aging is not only taking
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place in europe and japan and united
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states but it's also
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a very important trend in china it's
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also a very important trend in russia
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and so on and so forth
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so in other words uh one should expect
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major investments in health care in
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medical equipment in healthcare
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personnel and so on and so forth in some
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of the emerging economies
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well you know one of the things that
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sometimes concerns me is
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uh if any everybody in the world sees
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this trend that this
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aging population is aging and they all
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rush to create reverse mortgages and
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they all rush to create
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products and services for the elderly
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isn't there likely to be considerable
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oversupply and actually people will be
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worse off because of that well
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eventually there will be
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a lot of companies and a lot of banks
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interested in
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you know providing goods and services
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for that segment of the population but
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right now
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i would say that way more than half of
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the current needs
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are still
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going unsatisfied in the marketplace
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this is true in the united states this
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is true i think in many countries around
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the world
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at the same time let's keep in mind that
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the number just the sheer number of
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people in their 60s or their 70s or
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their 80s is going to grow very very
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quickly
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so my sense right now is that supply
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meaning the number of companies that are
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offering these goods and services is
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lagging seriously behind the demand and
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it will contin that will continue to be
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the case i think for the next five or
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ten years
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i'd like to sort of switch now if you
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don't mind to
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another of the big
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global trends that you mentioned which
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is the financial one
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so until now we have had the u.s dollar
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almost serve as a reserve currency
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for the world really because it's
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accepted everywhere
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but slowly the chinese rmb tends seems
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to be coming stronger and stronger
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what do you think is likely to happen
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there and how should companies factor
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that into their growth plans
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well i think we are definitely going
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through a transition phase in terms of
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the global financial architecture as you
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just pointed out the dollar has played
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the dominant role in the global system
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for the last 60 years or so
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but then
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that period
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referring of course to the post-world
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war ii period that was a time when the
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u.s economy was the biggest by a wide
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margin and when the us was the biggest
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trading nation in the world
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right now china is already the biggest
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trading nation and the chinese economy
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may within
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five years or at most 10 years become
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the largest economy in the world so the
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world the global economy needs the
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chinese currency to play a role and
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we're starting to see the beginnings of
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that especially in east asia so
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countries such as thailand or indonesia
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or the philippines are starting to think
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about how to
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increasingly link their economies to
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china
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not only
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in terms of trade flows but also in
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terms of financial flows and currencies
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and so this is going to change the
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landscape for all companies even if they
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don't operate in china
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because companies will need to
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do hedging for example
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in a different way they will need to
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revisit
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their cash flows around the world so i
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think the treasury functions at major
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multinational firms in the world are
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going to have to do a lot of homework
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in order to adapt to the new realities
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in the global financial architecture
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what are the implications for the world
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economy for the rmb to become a dominant
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currency well first of all i don't think
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it's going to become a a dominant
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currency in the sense that is going to
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displace the dollar i think we are
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moving into a kind of world in which the
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renminbi at some point will play a role
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alongside with the dollar and the euro
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and perhaps a couple of other currencies
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i think the indian rupee at some point
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in the next 20 or 30 years will also
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play a role if
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growth in india continues
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but the important thing to keep in mind
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is that multinational firms because of
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the complexity of their operations
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they move money around the world right
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because they generate revenue in one
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part of the world they get funds from
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another part of the world they keep
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their money in certain parts of the
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world because maybe taxes are lower and
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so on and so forth what i'm saying is
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that what i'm suggesting is that in the
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next five to ten years most of these
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companies will need to revisit the
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assumptions
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that they've been working with when it
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comes to making decisions as to those
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money flows inside of the firm
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and if they don't i think that's going
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to have a big impact on their
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profitability
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and on the amount of money at the end of
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the year that they'll be able to offer
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their shareholders in return for the
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funds that uh they have given the
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company to operate
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so so i mean that that's clearly you
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know both an opportunity and a risk
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uh what are some of the other major
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risks especially on the geopolitical
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front
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that you see and how should companies
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either hedge their risks
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or are there opportunities in those
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risks yeah i think the biggest
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risk right now
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and
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looking down the road for the next five
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years or so
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has to do with a combination
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of factors what we see is that there are
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certain parts of the world
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where we see very young populations so
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the population is growing rapidly
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and at the same time we see that the
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corruption is a problem government
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corruption and we also see that there's
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political instability and on top of all
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of that these are countries that happen
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to have
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a lot of natural resources energy
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minerals and so on and so forth so i'm
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referring to some parts of latin america
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but mostly to sub-saharan africa the
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middle east and south some parts of
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south asia
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so this so-called long arc of
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instability in the world that stretches
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from latin america all the way to south
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east asia and then reaches a climax in
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sub-saharan africa i think it's a major
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source of volatility and of risk to the
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entire global economy
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i think one cannot understand for
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example nowadays the fluctuations in
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commodity prices or in energy prices the
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extreme volatility without taking into
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account this combination of factors once
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again young populations rapidly growing
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populations
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political instability corruption
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all of that coupled with
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natural resources
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energy and minerals so how do we hedge
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those risks what do we do well companies
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on an individual basis certainly need to
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be very careful as to where they invest
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but more importantly how they invest i
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think the issue is not
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oh
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are there a number of countries out
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there that i need to avoid no i don't
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think that's the right way of thinking
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about the problem the other way of
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thinking about the problem is
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if i want to be a multinational firm a
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truly global company i need to operate
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in a variety of markets
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so based on that assumption what is the
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best way of operating and i would in
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particular recommend that companies
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think about staging their investments
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that companies keep their options open
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and if unpredictable events happen then
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they can quickly rearrange their
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operations in such a way that
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you know a crisis in a particular part
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of the world
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doesn't affect their operations and
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their profitability on a worldwide basis
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you know one more risk that we hear
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about a lot these days is cyber
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terrorism
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part of the challenge seems to be that
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very often uh you know the the threat
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may come either from some governments or
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it may come from
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you know amorphous groups of hackers
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that don't have a state
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your stateless
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units
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what do you think is likely to happen
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as far as
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that is concerned
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yes cyber risks or risks related to our
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increasing reliance on information
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systems and
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telecommunications and that the transfer
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of information
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all over the world
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i think are clearly going to be on the
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increase
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we have
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i think obtained many advantages from
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the information and telecommunications
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revolution
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we have cut costs we have
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enabled companies to essentially pursue
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opportunities in many different kinds of
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markets to relate to their customers in
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different markets
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to look for the lowest cost
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platforms
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in on which to
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manufacture their products and so on and
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so forth
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so there's many benefits to information
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and telecommunications technologies both
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internal to the firm and to society as a
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whole but of course there's also risks
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and increasingly over the last i would
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say three to five years what we've seen
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is an increase in precisely those kinds
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of risks that come in some cases from
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governments but most likely
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from individuals who essentially want to
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make a dent and maybe spend a few years
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in jail and then leave and become
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consultants right
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to major multinational firms or
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governments which is what some of them
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do
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uh you know which is a kind of a replay
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of catch me if you can uh you know the
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the
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the movie so the the the issue here is
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essentially what should individual
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companies do
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well uh it is very clear to me what what
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they should do uh is
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ensure that nothing that they view as a
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strategic asset or resource can be
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affected
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by this kind of cyber attack
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so not all resources
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not all assets inside of the corporation
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are equally vital
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the company needs to make sure that it
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understands what are the
00:14:44
five or six or seven things that they
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don't want anybody
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to lay their hands on
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and they have to protect those things
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very carefully
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let me ask you one last question
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you know 15 years ago if you were to
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look at the internet
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it would have been very very difficult
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for anyone to predict
00:15:04
that social media will become such a
00:15:06
powerful force
00:15:08
i mean or that a company like twitter
00:15:10
may come into existence and its platform
00:15:12
will have the power even to topple
00:15:14
governments
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looking at the next 15 years if i were
00:15:18
to ask you to look into your crystal
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ball
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and see what do you see what would your
00:15:24
answer be
00:15:25
well i think there are at least two very
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exciting and very promising
00:15:31
areas in which uh
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we're going to see a lot of action
00:15:35
one is the intersection of information
00:15:39
technologies and robotics
00:15:41
this is going to transform manufacturing
00:15:44
it is going to transform the way in
00:15:46
which we consume goods and services
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it is going to transform education i
00:15:52
wouldn't be surprised if in five years
00:15:53
from now i am redundant as a professor
00:15:56
and that we can have a robot in the
00:15:57
classroom uh actually doing probably a
00:16:00
much better job
00:16:02
this is only going to transform the
00:16:03
automobile industry as we know
00:16:05
it's already transforming surgical
00:16:08
procedures at hospitals
00:16:10
so this combination of informatics and
00:16:14
robotics
00:16:15
that's one area in which i think there's
00:16:17
going to be a
00:16:19
you know a lot of potential and of
00:16:21
course we see a lot of activity
00:16:23
both in terms of startups and also
00:16:26
established corporations that are making
00:16:27
big investments i think the other area
00:16:30
is more broadly in the use of artificial
00:16:32
intelligence
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and
00:16:35
you know language based you know
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artificial language based uh you know
00:16:39
protocols and so on and so forth and if
00:16:41
i may add a third area uh i truly
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believe that uh
00:16:47
three-dimensional printing 3d printing
00:16:50
it's also going to be
00:16:53
you know a high growth
00:16:55
industry
00:16:56
right now most of the visionary
00:16:59
applications that one reads about
00:17:02
strike one as being you know kind of
00:17:05
crazy uh or outlandish
00:17:08
uh but we're only in the beginnings of i
00:17:11
think a major trend in terms of
00:17:13
decentralizing manufacturing especially
00:17:16
of uh
00:17:17
very specific parts and components so 3d
00:17:20
printing i think has the potential of
00:17:22
revolutionizing quite a few things and
00:17:24
also by the way enabling poor and
00:17:26
disadvantaged people and countries and
00:17:28
communities
00:17:30
to perhaps play a more important role in
00:17:32
the global economy
00:17:34
great
00:17:35
so
00:17:35
before i thank you maura i just want to
00:17:37
have a small reaction to what you said
00:17:39
about robots replacing professors
00:17:43
there was an earthquake in los angeles
00:17:45
recently
00:17:46
and that story was broken in a matter of
00:17:48
three seconds by a robot journalist so
00:17:52
for all you know i may be redundant
00:17:54
as well i think journalists
00:17:56
should be watching those trains very
00:17:58
carefully as well
00:18:00
maru thank you so much for speaking with
00:18:01
knowledge at wharton thank you for
00:18:03
having me
00:18:26
you
