Michael  01:20

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Vik Malhotra  02:05

Welcome. Thank you for having me, Michael. I appreciate it. So you’ve got

Michael  02:10

a very storied career at one of McKinsey’s, you know, landmark offices. So we can talk about many things, but let’s start off by talking about what you’ve seen over the last few years in your work, what are the big themes you see?

Vik Malhotra  02:22

Well, there are, there are, there are many, many themes that stand out, for sure, but some of the big ones are some of the big ones that I would highlight on the following. Firstly, you know, we continue to be in what I will call a 30 to 40 year tech revolution, there’s certainly an inflection point occurring as we speak with AI and agenda Kri and everything that’s happening with it, and it is transformative in many ways, but this transformation has been going on for 30 or 40 years, and We see wave after wave after wave occurring, so much so that at this point, every business at some level is a tech business. And so technology is clearly a very, very powerful theme that we see out there. Geopolitics is a very powerful theme. It impacts many, many, many global institutions and many domestic institutions that didn’t think they were subject to the power of geopolitics. And there’s been a really rapid shift in the last call it, 5678, 10 years relative to the 30 or 40 more benign years that preceded it. So that is a big shift. We see continued shifts on consumer behavior. There’s quite dramatic shifts on consumer behavior. That’s a that’s a big, big one to kind of keep, keep, continue, to keep an eye on. And then there’s just some underlying changes that have always been in place but continue to come to the fore, demographics being the more interesting one, particularly when looked at from the lens of many Western democracies, where increasingly with demographics were being challenged in terms of an aging population, and how do you handle all of that from a healthcare point of view, from a social security point of view, from a benefits point of view, and the like. So those are some of the things that I would highlight. But when you then kind of think about corporate America and corporate world, what this really does is it puts a big premium on leadership. It puts a big premium on CEO leadership. It puts a big premium on leaders who work with CEOs to really help lead institutions. And that’s where I’ve done personally, done a lot of my work over the last decade, which culminated by. Well, didn’t culminate, but which resulted in a book that we wrote on entitled CEO Excellence, which was published in 2022 which really is a book on leadership, building upon lessons from from great CEOs. And then a subsequent one we’ve just currently co authored with three of my colleagues, called a CEO for all seasons. Both of these books, at some level, are leadership books, but it talks a lot to the premium around leadership in this new era that we’re that or in the current era that we’re in. I like

Michael  05:30

what you bring up, because when I have most discussions with executives, most people don’t talk about geopolitics because they feel it’s not their purview, even though it affects them. And the other one you brought up is very interesting, which is demographic changes around the world. I’ve been traveling around the world this year, and one of the most striking things was Japan. And you go to Japan and just about everyone’s employed because there’s not enough people. And you go into the rural areas, and schools are closing down. Major diaper companies are shutting down production lines because they’re not enough kids. I read somewhere they’re one of the most popular companies for making a type of product that’s very popular in Japan, and said they won’t make it anymore. So a lot of changes, lot of difficulties that CEOs do not expect to cope with how are CEOs adjusting to these realities? Because it seems like it’s very different from when you were CEO in 2000 right? The world has shifted dramatically. You need to have all these skills. You have to manage consumer sentiment, you have to manage geopolitical crises, you have to decide whether you want to exit a country, stay in a country. How do you deal with this?

Vik Malhotra  06:45

Yeah, yeah. Look, I think, I think everything you’ve just said, Michael is is is is is spot on. I would emphasize though, in fairness to the CEOs of yesteryear, they too, dealt with, you know, their own version of change. You know, we, we kind of focus on geopolitics today, but 20 years ago we were talking about the axis of evil, right, its implications for for geopolitics, and you know what it might do? You know, 20 years ago, we were talking about consumer behavior shifts as people started adapting to the internet and and online purchasing and so on. And now we’re just seeing kind of the next wave of all of that. So at some level, it’s been, it’s been true there. And you know, CEOs have been, I always like to say that CEOs really live in a world of paradoxes, right? They’re dealing constantly with threading the needle, whether it’s whether it’s on the demographic issue or the geopolitical issue, or you can kind of extend that beyond that, right? You know, how do you balance the need to deliver short term earnings versus invest for future growth? How do you deal with respecting the legacy of a company versus disrupting for the future, given the trends that are underway. You know, how do you nurture the need to do the analysis to make the right decisions, versus, increasingly, the need for decisiveness and quick decision making, because others will move if you don’t. So I think this kind of change has always been there. It has certainly accelerated, and certainly the need for decisiveness and and more and rapidity of decision making, as has clearly, clearly gone up. But at some level, it’s always been there. But to answer your specific questions, I think on geopolitics, that is a bit of a new reality for many, many CEOs who actually didn’t, you know, kind of said I can work within the framework. But the framework has shifted dramatically over the last little while, and so, you know, I’ve seen leadership team after leadership team in the big institutions, increasingly standing up teams that are helping them really model out the scenarios and understand the different ways in which the company might have to quickly pivot. Should X happen, should y happen, should Z happen, and how do you really, you know, kind of handle that so, so they’re very quickly stepping up their own capabilities to to be able to deal with that, leaning on external advisors to kind of deal with what they might have, might have to address, you know, be it, be it wars, be it tariffs, whatever, whatever the situation is that that’s creating this, owing even as we go to it, if I can call it a more multipolar world, rather than a in a a globalized and more integrated world. So, you know, they’re playing out the scenarios and really learning how to pivot very quickly from one scenario to another as as things shift. Smaller companies, of course, who never thought they had to deal with geopolitics, and now suddenly found, you know, thrust in the middle of it, particularly with the tariff situation. They’ve kind of, kind of have to really kind of think through what, what are the implications? Nations, people, farmers, who didn’t think they’d be affected by this, affected by it. So, you know, that’s that’s clearly taking its place. I think your point on demographics is also a critical one, right? The reality is, many, many parts of the world, and it’s not just the western economies, are getting older and older very rapidly, right? But even China, some might argue that China is going to get older before it gets richer, right, because of the one child policy that they had for many years, they’re now very much entering an era of a declining population and an aging population. And so, how does the younger generation support this, this aging, aging population? It’s a big question that’s people are wrestling with in China, and companies who deal, who operate in China, having to, you know, deal with and handle that. Beyond the geopolitical question is the demographic question there. So these are, these are fundamental questions that a lot of CEOs are wrestling with. One

Michael  11:03

of the things that strikes me is, over my career, when I used to travel around the world, you would go to parts of Africa, South America, Asia, and American brands dominated. They owned everything, right? You go to some parts of the world and you only see American brands and they’re revered, which is still the case, American brands are held in high regard. But when I was traveling around the world, one of the things that struck me is the options that consumers now have, not from just American brands. I was in Prague, and I was walking around, and I came to a dealership that was owned by a Chinese electric car company that I’d never heard of, and I walked in and I was quite surprised at the quality of the vehicles. And these cars are popular around the world. It’s a different world whereby American companies would seem have to fight even harder to win the wallet share of customers around the world. And that, I think, is new for American CEOs.

Vik Malhotra  12:00

I think that is, that is very fair. You know, as as you well know, the electric vehicle market in particular is being, increasingly outside the United States, being, being dominated by the Chinese in terms of what they are doing, doing in that field. I’m not a big expert on consumer trends and, oh, sorry, consumer brands and where they’re going, but I completely take your point, which is competition is increasing and and what you’re probably going to see play out is that, you know, the really big US corporations who can invest deeply behind their brands can continue to play the global game in many ways, but those that don’t have that depth, that capability for you know, deep investments are going to have to just be much more targeted, much more focused in terms of the markets that they go after. They’re not going to be able to kind of play globally, just because the investment that’s required to kind of maintain that brand, you know, in dozens and dozens of markets around the

Michael  13:18

world. So in your work, you clearly advise leaders, but I’m sure there are times when you counsel them as well. What are some of the advice you see works best? What do you see leaders doing well today, coping with this multipolar world? Yeah. So

Vik Malhotra  13:36

the we highlighted a number of these things in our in our first book, the book entitled CEO excellence, I would, I would call out, you know, five things that I find these Great leaders are really doing to have their institutions truly excel and outperform others, not just US corporations, but global institutions. And they’re the following number one, the very best leaders set very bold aspirations for their for the institutions. I might even say they set audacious aspirations and visions for their company early on in their tenure. They put out a, you know, a view 578, years out in terms of where they want to take the institution. Many kind of view it as undoable, and yet, through all the issues of, you know, quarterly earnings pressures, pandemic, supply chain issues, etc. They persevere through that. I mean, I think Satya Nadella and what he did with Microsoft, taking it from being a basically a dividend company to a growth company, is a remarkable example of a leader with great vision, who, you know, put in a lot of mechanisms and ability. It for the institution to kind of reinvent and and go down that path. So number one, I think they have really bold, some might argue audacious vision in terms of what they want to do right? The second is, they are very, very tough minded, and as leader, as a leader, along with their leadership team, they really own this question of resource allocation. And what do I mean by that? I mean capital dollars, expense dollars and talent, all three of those things, capital expense dollars and talent. Great leaders really realize that this is a zero sum game. When I interviewed Jamie Dimon at JP Morgan Chase three or four years ago, one of the things that really struck with me was he said, You look, you can have as bold a vision as you want, but you got to remember that resource allocation is a zero sum game. If you have certain things you want to bet against, you got to put your capital dollars, your expense dollars, and your best talent against that. And by the way, in doing that, you are going to have to starve something, right? You are not going to be able to do it all. You cannot spread your resources like peanut butter, which is what too many institutions do. But the very best leaders in the very best institutions do not do that right? The third thing that really does stand out is they pay a great deal of attention to shaping a winning and performance based culture. And they also recognize that in big institutions, you cannot shift culture wholesale. You got to pick the one or two things that really matter. And I come back to what Satya Nadella did at Microsoft, where he picked on growth mindset. He could have picked on many other things, but growth mindset aligned best to the vision of what he wanted to do. It brought in elements of being customer centric, where the growth was going to come from. It brought in elements of collaboration, but that really, you know, moving a company on, on whatever element of culture that is really going to help support the vision, is something that they do really well, and they don’t overdo it. They pick on the one or two things that really matter. The fourth thing that they they typically do is they really build winning teams around them. I was struck by one CEO who said to me, this is not about building a team of stars. This is about building a star team. Too. Many of us have supported sports teams which is chock a block full of great stars, but they never come together as a team. How do you build a star team that really works well together to move the equation forward? So those are some of the things that I would really highlight that I see the very best CEOs and the very best leadership teams

Michael  17:37

doing. I love what you said. Many, many valuable points. The two that stand out for me is the one about, you know, strategy being a matter of choice, you’ve got to make tough choices, and we’ve got to back those choices with your capital allocation. And as you say, you’ve got to have the wherewithal to stand in front of your investors and the investing community, to explain what you’re doing and not deviate when the market sometimes doesn’t understand what you’re doing, but the part you raised the baby was something that I think haven’t heard anyone describe Microsoft’s change from being a dividend company to a growth company, but very few companies have been able to achieve that. We forget how significant the changes Microsoft have gone through because they’ve been in the press since the 1980s people think we know Microsoft, but to go from a company that was basically a cash call, giving up dividends stably from the Windows monopoly, to go back into a growth phase and then allocate the capital go beyond AI, that’s a significant change in mindset, absolutely,

Vik Malhotra  18:41

and that’s where, you know, I look at a leader like Satya Nadella, who, you know, to me, remains one of the truly generational leaders of our time as a CEO. And I look at, look at what he’s done, and it’s transformational. I mean, he said a bold vision in terms of the strategy and the direction that they they wanted to go in building upon the legacy that he’d inherited, for sure, but, you know, taking it well, well beyond that, has had the ability to reinvent, right? This is the other thing is, even as the shifts and the changes occur, there was never any complacency that said in okay, we won the last three years, we can’t rest on our laurels, right? Things continue to move and shift, and as we get into AI and other things, how do we continue to reinvent and rescale and and and take advantage, or indeed lead the way into the into the next, next wave? So there’s a the strategic piece was key. I would argue, actually, the cultural shift might have been one of the biggest things that they did right the shift to a growth mindset, which brought in elements of, I think, if you, if you read his book, and you kind of dig into it, you see, you see a lot in terms of, you know, some real definition of where my. Microsoft and institutions that have done other cultural changes need to go to some real elements of role modeling by satyama della and the leadership team around behaviors expected you see a lot in terms of capability building to help the institution move forward. So you know, some really interesting shifts there, there as well, from a from a cultural point of view. And then, you know, continuous reviving of the leadership team and kind of continuing to nurture and really grow the talent becomes a critical element as well. And by the way, you see that, you see many of those pieces that other places you see that you know, you know in other tech companies, certainly see it at Amazon. Increasingly, you’re seeing it at even an old, old company that’s reinventing like IBM, you know, I think they’re doing some some, some interesting things. So, you know, you see this in a number of places, both tech and non tech companies that I think you know, the very best leaders and best leadership teams continue to do

Michael  20:58

this. Well, on Monday, I was talking to someone in the United States military, we’re looking at doing some work to help them think through some scenarios. And remember this one guy, one of the generals, asked me, What do you think the United States should do to protect its economic future? And actually told him this, you should have a SEAL Team watching Satya Nadella. That’s what you need to do. That’s what you need to do, but sticking on. Satya Nadella, what strikes me is his leadership style is not bombastic. He’s a very reserved person who was able to turn this entire company around, because if you read literature right for a long time, Americans tended to revere leaders like Jack Welch, the guys go out there, they’re driven. They just push things. They don’t worry what people are thinking. They pull everything along, kicking and screaming. So he has a different leadership style. Nadella, how was he able to do that?

Vik Malhotra  21:53

Yeah, well, look our we’ve done a lot of research into this, right? And when you in each of our two books, the people we interviewed for the books had to meet three or four criteria. We basically looked at 5000 CEOs globally and based on tenure enrollment, length of time and role based on performance and based on recognition by by your peers. We narrowed that 5000 down to 200 and across the two books, we interviewed roughly 100 people that form the core of the stories in these books, about about about leadership, right? And sahina Nadella is Indeed, indeed one of them there is in today’s world, I would call it. The last 20 years, there is a real red thread that runs through these leaders, and that is the red thread of servant leadership, right? If you go back to 1975 this gentleman by the name of Robert Greenleaf, who wrote the seminal essay, the servant as a leader. And the essay is long and boring, but when you cut it down to its essence, it essentially says the following. It says, great servant leaders have great vision, great foresight, great perspective, right? But the way that they succeed is that they recognize that the institution is bigger than themselves. They recognize that they’ve got to work through others to make things really hum. They recognize that they got to invest in other people’s success. They got to be good listeners. They’ve got to they’ve got to be authentic. They’ve got to be they’ve got to be thoughtful. Those elements, you know, present themselves, not just in Satya Nadella, in my view, but also in many, many, many others of the most successful CEOs of our time, right? So I in the world has moved on from the leadership model that you talked about, and that was kind of, you know, 2530 years ago, in today’s world, you see this red thread of servant leadership really being present in most of our great CEO leaders?

Michael  24:06

Yeah, that makes sense, because today, I mean, we all know these CEOs who have almost like a god complex, where they believe they are the only ones who can save the company, but they do it in a way where they override and destroy the institutional glue in a company, and when they leave, they leave a company that shattered. But what you’re saying is servant leadership is about someone who respects the institution first and foremost, and what they’re trying to do is leave the company better off,

Vik Malhotra  24:35

absolutely, absolutely right? And that’s not to say that they just delegate everything. Right? These are leaders that have great vision, they have great perspective, they have great foresight, but they know that to make it work, they got to thread the needle through the paradox, as I talked about before, they got to work through with others to get things done, and that’s how they leave the institution stronger. Then, then, then, how they found it

Michael  25:02

That sounds easy to do that it’s actually pretty hard to do because it means that to be patient, yep, you have to be willing to say, look, I can do this by breaking the rules and inverted commas, but I’m not going to do it because I know that I need the respect and followship of my leadership team, and the only way to do that is to convince them and work through the institutions they have, which takes patience. It takes time. It’s not a quick win, right?

Vik Malhotra  25:26

Yeah, change management is hard. What you hear a lot of these CEOs say is, you know, they kind of decide on the direction, by the way. Importantly, no matter how much input they’re taking, they tend they will resist temptations to dumb down their vision, right? I mean, it is very easy to kind of have a point perspective, point of view, and then you take a lot of input and you dumb it down, because that leads to incrementalism. And most of these great leaders would say incrementalism will be the death of your institution, right? If you are incremental in today’s world, it’s just moving too quickly for you to be successful, right? So they kind of, they kind of have the bold vision and the board, board perspective, but, but, but they also realize that they, you know, this is going to take time to really work out. And a lot of them will tell funny stories about the fact that, you know, for four years, they just said the same 10 things over and over and over again, as Ajay Banga, who is the former CEO of MasterCard, once said to me, and by the way, what a story, right? He took MasterCard from 17 billion in market cap, and he took it over to eight years later, it was 20x that value, you know, north of 300 billion in market gap. Just an extraordinary story of an institution and growth trajectory. And I remember he said to me when I interviewed him about, I don’t know, three or four years ago, well before he went to the World Bank, he said, I just got sick and tired of my own voice because I just keep saying the same thing over and over and again, and do it patiently and thoughtfully and carefully.

Michael  27:06

But that’s true, right? You know, one of the things I always tell clients is you got to almost follow a pattern the way successful politicians work. They have three, they have like, one or two or maybe three messages that they always deliver every day, every week, every month. That’s their policies, and that’s what you’re saying. You have to keep repeating your priorities for your vision and never deviate from it, because it takes a long time for the organization one to listen, understand and follow you. And if you deviate, the organization doesn’t know what the lighthouse they are following. It sounds boring, but consistency is boring. Actually.

Vik Malhotra  27:45

Yeah, it is, it is, it is. Which leads me to a related point, which is the other thing you see with these great CEOs, as they push forward along these dimensions, is they don’t, they tend not to suffer, or they certainly don’t suffer from what I’ll call a sophomore slump. It’s interesting. When you look at CEOs, there are actually a large number of CEOs who are quite successful in their first two or three years. They come in with bold ideas, bold perspectives. Have, you know, have the energy to create reinvention and actually have great success in the first two or three years. But then come your, your, your your four year five, they get caught up in their own orthodoxies, and, and, you know, it’s almost a little bit of defend your legacy. Get caught up in your own orthodoxies. Yeah, stop listening, stop taking input, stop learning. You know, in today’s world, you got to have this kind of continuous learning mindset, both learning it from internally, but also learning from the external environment and and what you see with the great leaders is they don’t have a sophomore slump, right? They just realize the importance of, you know, you cannot be complacent. You got to continue to reinvent. You got to continue to kind of take the institution to the next level. And so every three years, they’re almost a reinvention that’s coming, and they’re darn good at that. They are really, really good at that.

Michael  29:21

You know, one of the examples I use is Jamie Dimon. I mean, the guy’s been around for so long, but he keeps pushing the bank forward, and he finds new ways to go forward. You would think it would be hard, because they are the dominant financial institution in the United States. You would think they’d be losing market share, and somebody finds ways to assemble very capable people. I mean, his leadership team is outstanding, and he pushes the bank forward. The guy’s been around for so long that you must take him for granted, right?

Vik Malhotra  29:50

We had the privilege of interviewing him for both our books, and you’re exactly right. I mean, one of the things he said to me in. I believe it was in the first interview was, he said. And he took, he took great accountability. Remember, they six back in 2012 they had the $6 billion write off for what was London Whale. I believe he took great he took a complete accountability for it. You know, in urges board to kind of look into it and take a hard look at it. And he said, one of the big lessons I learned there was you just can never be complacent. You just can never be complacent. And that, for both him and many other CEOs tends to drive them is this just, you know, will not be complacent as they move forward, no matter what success they’ve had. And

Michael  30:39

that’s not something that you can teach in a business school or something, right? It’s an innate quality of a leader. Yeah, yeah. You can’t tell someone to never give up or always be paranoid, because for most people, they just grew up in a world where they think, well, it’s going to be better than last year, right? Right?

Vik Malhotra  30:57

Exactly, exactly. And you know this, this brings me to a related point, which is, I’m seeing this again with the very, very best leaders, is they are really quite focused in on, how do they institutionalize a learning culture in their organization? Because if you’re not going to be complacent, yes, I take your point that part of it is your DNA, right? Part of it is who you are, and it might be, you know, nature or nurture, but there is an element of, can you teach an organization not to be complacent? And the way you do that is, can you institutionalize a learning culture so that people are continually the CEOs themselves, but also their leadership teams, are continually learning, both internally right, from people within the organization who you know might be dissenters, naysayers, you know, finding ways to have the aperture be wide open, to learn from, you know, the many 10s of 1000s many of these companies have in terms of their perspectives and ideas and thoughts, but also, importantly, given how rapidly the world’s evolving, are we learning enough externally, right? Are we learning enough externally so that we were kind of looking around the corners? You know, Steve Schwartzman at Blackstone, when I interviewed him for for a podcast, he said, you know, the important words, the effect of the importance of looking around corners is absolutely critical, right? You got to be, you got to be able to do that, and you can’t do that if you don’t actually, kind of are all over the trends of what’s happening today and what might be coming down the road in the future. So kind of this, you know, institutionalizing learning in an organization, both from internal and external sources, is another, you know, if I can call it powerful lever that the very best leaders employ.

Michael  32:55

You mentioned Schwarzman, one of the things that strikes me about him and Jamie Dimon as well, I think, for all good leaders is that in every CEO’s tenure, things are going to go wrong. It’s just inevitable. There are things are going to go wrong that’s not your fault, and there are things that are going to go wrong that are your fault, because ultimately, you messed up some way. But the thing that strikes me about both of them is how much they analyze their own mistakes. They write it up. They create case studies. They restructure the investment committees based on a mistake they made. One story. Arnold Schwartzman, I don’t know if he says this to everyone or wherever he says it, but he talked about the first time they made a mistake to lose money, and the head of pension fund or whatever, brought him to a yacht and screamed at him for 30 minutes, and he said, You never forget that. So you want to analyze that, but it’s an interesting thing, because a lot of leaders hide their mistakes, yeah, but you need to have real confidence to analyze your mistakes and publicly discuss what you found in the changes you’re making. It often comes down to innate confidence as well, right?

Vik Malhotra  34:04

I completely agree. I personally have not heard that story, but it completely resonates. And I do think that many of the many of our great leaders, many of our great CEO leaders today are are always learning from their mistakes, are willing to, you know, lay them out, discuss them, analyze them, and so on. And a related point, if I may, in learning from your mistakes is they also realize that, you know, if today’s world puts a premium on decisiveness, right and speed of decision making, you’re likely to make more than your fair share of mistakes. Right back in the day, you know, before information was as rampant and the like, you had lots of time to analyze things. So, I mean, just even take an M and a deal, you know, I still remember you take six, 912, months to look at, you know, today you might, you know, it’s. Things start happening in the AI world, and you need to kind of double down on something. You may have to make a decision, you know, in weeks, maybe even days, and and, and so the decisiveness factor, you know, continues to go up, and that’s going to come with some more mistakes, and you got to be able to learn from those and adjust, right?

Michael  35:18

Yes, I remember speaking to, I forget his name. Now he was an executive at Amazon who used to report it to Bezos at one point, and he was telling me the story whereby in Amazon, you are expected to fail quickly and cheaply often, because if you’re experimenting, at least 70% is going to fail, basically failure that’s controlled so if you go into a meeting and said, Look at me, I’ve done 10 things and nothing failed, Amazon doesn’t think you’ve done enough, yeah, and it’s controlled failure. You need controlled failure. I

Vik Malhotra  35:52

think there’s a there’s a lot of there’s a lot of wisdom to that. There’s also the flip side of that. And I learned this from Ed bream, who’s in our first book based on the amazing job he did at Tyco in terms of taking a very troubled institution and turning that around. And Ed’s been a CEO across three different institutions, most recently CEO of DuPont for 19 years. And he said, what’s the effect of, you know, I’ve made, I make you know, as a CEO, I make, you know, 10s, if not hundreds of decisions every week and every month. But he said, over my 20 years as a CEO, I probably only made 25 truly, truly consequential bet the company decisions, yeah, and on those ones, he said, I have sweated the details. I have, you know, they’ve kept me up at night. I’ve, I’ve, I’ve thought through, or worked with my team, or spent the time to really understand the second, not just the second order, but also the third, fourth, fifth order, consequences of the deal of whatever it is, whether it’s a talent decision or an organic growth decision, an inorganic growth decision. And he said, when it comes to those, you know, there’s one thing to fail on the on the smaller ones, and learn from it, and kind of have that continuous learning mindset you talked about. But there are times when CEOs are required to make better the company type decisions, and those really do require you to be extraordinary risk managers. In addition to having bold vision, in addition to be great at resource allocation, you’ve also got to be an extraordinary risk manager to be able to think through those second, third, fourth order consequences.

Michael  37:36

That reminds me of the time during covid and just before covid, and I would talk to automotive executives in Europe, and a lot of them, well, all of the ones I spoke to did not visit, well, they couldn’t visit China during covid, during those three years of a lockdown, and they were not aware of what the Chinese were doing. And then post covid, the Chinese just came out of nowhere with all these changes in electric vehicles. Now you talk about, and I agree with you, in a CEO’s tenure, there’s going to be a few decisions they have to make that truly creates the majority of their value, right? But you have to be aware about what it is you need to know and you need to go see it. You know, I always tell people, if you want to see what’s happening in the world, go to Asia today. It’s going to blow your mind, right? You need to go to Asia to get scared a little bit and come back home and do something about it. But self awareness is something that, again, some people have it. Some people can be taught. But it’s something innate. It’s part of your personality.

Vik Malhotra  38:36

Yeah, I completely see that. I completely hear that.

Michael  38:40

So it’s a very interesting Well, I want to wrap up our discussions talking about technology a bit, because you know what’s happening in AI so on. Now I remember time. I’m sure you remember a time when the Chief Information Officer used to report to the CFO, then he reported alongside the CFO. And now every exit, not every executive, but I think every executive needs to understand technology today. I don’t think you can run a company with the global aspirations and global ambition and not understand how technology is going to transform your business, the customer interface, and, you know, all these wonderful things. There’s a lot of talk in AI, and it’s the early stages of AI, right? This is like the early days of the first browser coming up. What do you think the good leaders should be doing when it comes to technology and AI, well,

Vik Malhotra  39:27

I personally believe that we have gone to a point where, you know, at some level, every company is a tech company, right? Yeah, and I think you’ve got to kind of go with that mindset, right? If I’m a financial institution today, I’m really a technology company, right? I’m providing financial institution capability, but it is, it is all you know. It

Michael  39:54

is a technology company, right? Basically, that’s what a bank is. So.

Vik Malhotra  40:00

So, you know, I think the increasingly, the mindset I’m seeing CEOs and leadership teams take is, we are a tech company, right? We are a tech company. You got to kind of bring, and therefore you’ve got to you when it comes to technology, you got to think through, you know, maybe three or four things right? Number one, are the people leading and thinking through your tech decisions really more business led, rather than tech led, right? And so, you know, increasingly you’re seeing just much more business centric leadership around how technology is driven in these institutions, right? Number one, number two, you know, we can get caught up in all this terminology around agile and, you know, product platforms and many other variations of things that get talked about, but the power of teams coming together between tech people, risk people, business people, etc. And so you form these to use, use agile terms. You form these pods and the like. Really move the board forward from a customer point of view, or from a change point of view, or from a productivity point of view, I think you’re going to see increasingly, the way you solve these things isn’t by having a business organization and a tech organization, joint organizations that are going to really kind of create, create the value For the institution, right? And the third thing is, I do think that, particularly with AI, we, we, we are still, as you rightly put it, the early stages. But there is still too much experimentation going on, right? A lot of it is, you know, it’s interesting. If you kind of dig into the stats, you know, something like 85% of all executives will say, I’m AI facile, right? I’m trained, I understand stuff. And yet most of them would say we’re just, we’re not actually scaling AI, we’re just experimenting with it, right? And so there’s gonna have to be the next generation shift where the scaling truly occurs, a little occur in certain areas faster than others, but that scaling has got to come as well, right? So, you know, I very much see most companies as tech companies, and they’re just going to have to operate differently, or have already begun. Actually, in fairness to many of them have already begun to operate differently, and will have to continue to operate differently if they’re going to succeed, right? If you, if you draw, draw a difference between business and and tech today, I think it’s a losing

Michael  42:52

proposition. I remember the time when Google first entered the mainstream culture, and a lot of companies would come to us and say, We want to be like Google. We need an innovation department. We have an innovation team which will ring fence, and their job is to innovate for the company. And you know, we would advise them that you don’t need an innovation department. You need innovation culture across your business. Everyone needs to innovate. I see a similar thing happening with AI, where it’s not all companies, but some companies believe that my AI problem, or technology problem is fixed because I got a team of people working on AI, but it’s not a company wide issue. And I think, as you say, that culture shift needs to happen on your point. I remember speaking to an executive in financial services recently, and they were talking about AI not being ready for what they wanted to do, but I think you got to use AI for what it can do today, and it can do a lot. Right? When I use chat GPT, of course, it hallucinates I know that I use it in areas that I consider myself an expert, so I can test what it’s saying and as a companion to help me, it’s formidable, but even then, I’m just using the basic chat capabilities, and not going into large language models and so on. And what people forget is AI has actually been around for a long time. In finance firms have been using large language models, sifting through data, looking for trends and so on. So to say that AI is not ready, I think we’re missing the point. It can do many incredible things, and the issue is failing, as you say, but also having a CEO who understands that you have to keep investing in technology, you can’t sit out this around it doesn’t work that way,

Vik Malhotra  44:30

right, right? I mean, I think the I mean, you’re, you’re, you’re, you’re spot on in terms of that observation, right? I mean, it just, it just absolutely has to be, has to be, has to be central to the business. You bring up this innovation point an example I will point you to is, I think what Shantanu Narayanan did at Adobe is absolutely, is absolutely central, right, okay, wonderful story. Yeah. I mean, he. He basically has created an innovation process across the company that is almost his signature process, that that a lot of the way the company gets run is because of the ideas that bubble up bottoms up, and that they have process to kind of call it. And, you know, get to the most interesting ones. But I do think innovation has got to come, you know, from within, from the businesses and the like, it can’t be incubated off in a corner.

Michael  45:25

You know, one of the things I always say to clients is that you must not forget that childlike curiosity you had when you were young. Yeah, you need to bring that same mindset to business. You don’t want to be someone who’s running through memos committees. You need to have a curiosity for new things in the world and not just experiment, but see it as normal that you roll this out in your business, right? I think that’s a good way to think about it. Vik, thank you so much. I really enjoyed this conversation. It was

Vik Malhotra  45:55

amazing. My pleasure entirely. I had fun as well. Thank you for having me so I

Michael  46:00

never got a copy of your two books, but I’m going to make sure I get a copy of them, and maybe we can do a follow up, because this was wonderful. So thank you so much, and I hope you have a wonderful day.

Michael  46:09

All right, you too, be well. Bye. Bye, take care. Ciao, bye.

Michael  46:12

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