Weekly Briefs from CEO Rich Lesser

In May 2020, Rich Lesser began sharing his latest perspectives and ideas, as well as some of the firm’s most compelling thought leadership, in an email to colleagues, clients, and friends around the world. This weekly brief has covered a wide range of topics that are top of mind for business leaders today, issues that have become more layered and challenging than ever: from global trade and consumer choice to corporate purpose, climate change, and responsible AI. Here is a selection of weekly briefs from their start to today:

Deep Tech for the Rest of Us

MAY 3, 2021

To BCG’s network around the world,

I recently asked my colleague Antoine Gourévitch, one of our top emerging-technology experts, to predict which of the exciting new technologies—quantum computing, blockchain, the next generation of AI, synthetic biology, nanotechnology—will be behind the biggest innovations and most important societal solutions through this decade and beyond.

I learned a lot from Antoine’s (non)-answer. Rather than placing his bets on any one of these, he is a true believer in the importance of a “deep technology” innovation model, which, as he explained in his recent TED talk, is not about investing in a single technology but leveraging a confluence of technologies and making them more accessible. Deep tech reduces research costs by standardizing new technologies and using data platforms to accelerate the lab-to-market process. The methodology is driven by science, engineering, and design thinking and requires a powerful ecosystem of partners.

In place of the traditional innovation model, where the work takes place in university labs or at large companies, the heart of the deep tech methodology today is in startups—30,000 strong, in fact—which are creating new technology prototypes at an average cost of $200,000. Deep tech ventures, attracting some of today’s most brilliant young scientists, can hold the keys to unlocking the toughest problems we face in areas such as sustainability, energy, nutrition, public health, education, and mobility.

But with such a frenzy of startups out there, what does deep tech really mean for the rest of us?

Unlocking innovation with deep tech offers extraordinary promise, but success requires established companies to embrace new ways of looking at how technology solves problems and new approaches to bringing solutions to market.

The first step when moving into deep tech is to remember that this is a business game, not a technology game. Instead of a solution in search of a problem, the deep tech model begins with a complex problem and tackles it systemically using multiple technologies.

Take the powerful example that we all witnessed over the past year as Moderna and the partnership of BioNTech and Pfizer brought two COVID-19 mRNA vaccines from genomic sequence to market in less than a year.

Or look at the joined forces of Bayer and biotech company Gingko Bioworks, which set out to tackle a problem that had seemed intractable: decreasing the carbon emissions involved in nitrogen fertilizer production. Rather than advancing the current model, the new venture, Joyn Bio, is seeking to disrupt the entire system using synthetic biology to enable cereal crops to fix nitrogen onto the roots of plants, mimicking nature.

The next step is to find the winning technology formula. Successful investors set up an interdisciplinary team of experts to research the landscape of deep tech ventures and identify the combination of available technologies needed to solve the problem at hand.

We’ve been working at this at BCG, developing a deep tech platform to provide information about startups and breaking their capabilities down into building blocks that companies should be able to choose from and combine in order to find the right solution

The third step is to manage the process through a design-build-test-learn (DBTL) engineering cycle. DBTL connects the problem you’re trying to solve with the science and technologies needed to solve it. Identify assumptions to be tested, reducing risk up front; build a working prototype as quickly as possible; anticipate the friction points; and cut back on the costs of testing and learning by using data and digital platforms.

The deep tech investment approach may seem counterintuitive. Big companies have their own R&D departments and may be resistant to reaching out, wary of anything not invented on the inside. But Antoine puts it this way: 2021 is for deep tech what 1995 was for digital. Back then, we certainly didn’t know everything that digital would be capable of, but companies suffered if they were slow to explore, experiment, and adapt with emerging digital technologies.

It’s still relatively early days in the deep tech wave of business innovation. Instead of playing catch up to own specific technologies, most of us will be better placed to dive into a thriving deep tech ecosystem to discover new solutions to our toughest problems.


The Superpower of Humans Plus AI

APRIL 12, 2021

To BCG’s network around the world,

At BCG, we’ve been writing for the past couple of years about the opportunity ahead to build “bionic companies”: organizations that combine what technology does best and what people do best, for outcomes far above what either can achieve alone. Our team of data scientists at BCG GAMMA has been working at the frontier of AI, and some of their most exciting recent projects have put the theory of the bionic company into clear practice, with impressive and sometimes unexpected results.

These projects don’t just involve an AI-powered tool, like retail personalization or a pricing widget, which can deliver impressive but narrow commercial results. Instead, they enable skilled operators of huge complex systems to maximize the capabilities of those systems, whether in mining, manufacturing, electricity, or airline ground operations.

These are situations in which a small number of people have to make important decisions, reacting quickly to shifting circumstances. The choices they make can substantially affect overall system performance with significant financial consequences.

I want to share with you one example, which really brings this to life. In our work with a diversified metals miner, BCG GAMMA delivered an AI suite that is now directly integrated into the company’s core asset operations, allowing it to ingest much more information than previously possible across a wide range of input and output variables. Operators can respond to the information in real time and deliver previously unattained performance levels.

The recommendations from AI are embedded in the system’s center of operations and are based on empirical modeling and rules—the operators’ actual experiences. And the operators remain in charge, choosing whether or not to accept what the AI is telling them. After working with the AI for more than a year, the operators are now also using it to test new hypotheses and expand the boundaries of the plant’s capability. At the same time, the AI learns from the operators as they put new approaches into motion—each dependent on the other to reach new levels of performance.

In this industry, finding 2% to 3% production improvement would be considered a success for projects of this nature—especially those not leveraging AI. With the AI suite now in place, the company is realizing an unprecedented 15% uplift in output, and the team is emboldened to pursue even more.

We’re seeing this kind of success across industries—instances of fully integrated AI that depend on a back-and-forth relationship with experienced operators in order to reach full potential. Instead of AI taking over jobs, it can empower even the most highly skilled people in their roles. In complex environments, unlocking the combined power of human and artificial intelligence is the key to building a truly bionic company.


Deleting the (Traditional) Meeting

MARCH 29, 2021

To BCG’s network around the world,

There’s a lot of talk these days about the future of work. With vaccinations offering a path to the end of this pandemic, and millions soon able to return to the office, we need to decide now how we can capitalize on, and not waste, what we’ve learned about work over the past year. One of the most important choices leaders have to make? How to conduct meetings.

Think of the pandemic as the ultimate centrifuge for meetings, which we’ve always used to try to accomplish a range of goals. COVID-19 separated the meeting into three distinct categories: 1) traditional meetings, for sharing information, discussing, and deciding; 2) workshop-type meetings for ideating, co-creating, and innovating; and 3) opportunities to connect and build personal relationships. Meeting nearly entirely online over the past year has meant a big step forward for #1, a mixed bag for #2, and a step back for #3.

Virtual meetings brought big improvements to traditional meetings. They flattened hierarchies; extended participation across levels and geographies; encouraged dialogue rather than one-way flows, with chat and polling functions; and even brought more order, as we used the hand-raising tool. Without having to manage travel schedules to get together, teams spread out around the world were faster and more agile. Coaching happened in real time to encourage colleagues to speak up, raise a tough issue, or create room for others.

Innovating when we weren’t in the same place was more complicated. The digital natives and quick learners would argue that some of the newer tools allowed for far superior online brainstorming sessions. But many of us—slower to get comfortable with these tools—found creativity was reduced and innovation somewhat inhibited. In our post-pandemic world, how we conduct these types of sessions will likely depend on the topics, as well as the locations and capabilities of attendees.

About #3, the remote world left us longing for the richer connections and deeper bonds we get by being together. But the truth is that this mostly didn’t take place in meetings anyway. It happened around the meetings: during breaks, over lunch and dinner, perhaps at a special event, or in our travels together. Returning to the traditional meeting format because we want to rebuild bonds would largely be a false narrative. What we need is to be more deliberate in setting aside time to connect around our meetings.

If this summary is roughly right, the last thing we want to do over the coming months is return to the old meeting format. It’s a choice that would pressure everyone to sit around the same table, make those who have to dial in feel marginalized and left out, reduce participation given physical room sizes, add a lot more time on airplanes, and reassert old and less agile hierarchies.

Instead, let’s at least test out new approaches. Segment our meetings and push most to virtual formats, such as Teams, WebEx, and Zoom, even when most participants are in the office. And create more room for longer breaks, lunches, and sometimes dinners to kick around ideas, socialize, and build bonds.

In the months ahead, CEOs and senior leaders will set the direction here. If we revert to old models, we can bet our people will, too. And that will make us less sustainable, less agile, and slower in dealing with many of our management responsibilities. But like you, I just can’t wait to have lunch with friends and colleagues and spend more informal time together.

Deleting the traditional meeting while investing to build personal bonds is a win-win, a signal from leaders that we want to capture and build on what we’ve learned over the past year. If you want to write me back, I would love to hear your views and stories about this, too.


Busting Today's Five Biggest Inflation Myths

MARCH 15, 2021

To BCG’s network around the world,

Like many of you, I’ve started to worry about inflation in the US recently—particularly because of the new $1.9 trillion COVID-19 relief and stimulus package in this country and lots of talk of inflation in the news. And when I have questions and concerns about the economy, I usually turn to Philipp Carlsson-Szlezak, BCG’s chief economist, to get his take.

Philipp’s Harvard Business Review video from a year ago, which envisioned potential economic scenarios as a result of the pandemic, was HBR’s most-viewed in 2020. He always has a clear point of view, grounded in historic reality—the “one-handed economist” that Harry Truman always wanted.* When I asked Philipp about inflation, he told me that he believes the doomsday headlines are overblown, despite the strong stimulus, higher inflation expectations, and the recent rise in rates. In an excellent new video, Philipp explains how low and stable inflation are at the heart of a healthy macroeconomic regime with high valuations—and debunks these five common myths:

  1. Inflation is already rising. Yes, but this is a mechanical effect of a weak base period, when the economy was in free fall last April and May. The one-, three-, and six-month windows of inflation since then have all included spikes that then came back down. We’ll soon hit the one-year mark since last spring’s weak base, and we expect to see the same pattern in our year-over-year inflation measure: a spike and then a leveling off.  
  2. If my input prices go up, so must consumer prices. Commodity prices have moved significantly higher, leading many CFOs to link this to consumer price inflation. But producer price inflation across the stages of the economy’s value chain show that such pressures are gradually absorbed in the margins or offset by higher productivity growth. Typically, only a small part of producer price inflation reaches price tags on supermarket shelves.  
  3. Printing money leads to higher inflation. There is a connection between money and prices, but money supply growth is a poor guide for realized inflation. The data since the 1960s doesn’t show a clear correlation—not even after 2008, when money growth accelerated and many predicted high inflation. New money doesn’t automatically translate to new spending, and new spending doesn’t mean the economy is capacity-constrained.  
  4. A strong economy delivers inflation—and then recession. In the modern era, inflation doesn’t respond readily to cyclical pressures because of disinflationary global value chains in the goods sector, disinflationary digital business models in services, and the power of a well-anchored regime. While this doesn’t guarantee long-term low inflation, it does make high inflation unlikely.  
  5. We are on the path to 1970s-style inflation. This is the most serious misreading of inflationary dynamics. An anchored inflationary regime can break, but it’s an improbable shift and would happen over time. In the 1960s, the last time a good inflation regime crumbled, we saw sustained, not one-off, fiscal stimulus and monetary errors—all when the economy was already overheated.

Stimulus and vaccines are thankfully delivering a stronger-than-expected recovery, shifting growth expectations—and therefore inflation expectations—higher. There’s little evidence that we need to worry about a regime shift in inflation anytime soon.

*Harry Truman famously said, “Give me a one-handed economist! All my economists say, ‘On the one hand… [and then] on the other.’”


Overthrowing Your “Inner Dictator”

FEBRUARY 8, 2021

To BCG’s network around the world,

I’m a huge fan of Adam Grant. The Wharton professor of organizational psychology wrote a book called Give and Take back in 2014 that has had a major impact on my thinking about BCG’s culture and formula for sustained success. It’s the one book I give to every managing director and partner, and I’ve recommended it to many CEOs.

The book challenges some of our most ingrained assumptions about what makes people successful in business and in life. It identifies three profiles—“givers,” “takers,” and “matchers”—noting that while givers tend to underperform on average, they also often stand out at the very top of the success ladder. These ideas get at the different ways in which we develop relationships and enable givers to thrive, how we can promote more supportive cultures and weed out takers, and, translated into a BCG context, how we can strengthen the fabric of our partnership and deliver lasting impact to our clients.

Now Adam has a new book—Think Again: The Power of Knowing What You Don’t Know. As someone who has told each incoming class of BCG consultants for 25 years that the skill they need most is not knowing what they know but knowing what they don’t know, I’m thrilled to see Adam bring this concept to life so powerfully.

In Think Again, Adam explains that we all have an “inner dictator”—that part of ourselves that rushes to protect our beliefs and points of view. We have to work hard to keep that voice at bay, question our assumptions, and be open-minded enough to rethink what we thought we knew—and to help others do the same. Overthrowing our inner dictator will allow us to keep learning for the rest of our lives.

To build an organization where rethinking can happen, leaders need to foster an environment that emphasizes learning over short-term performance. The book spells out three overarching steps for creating that kind of learning culture:If there was ever a time when the past won’t predict the future, it’s now. Whether it’s battling the pandemic, taking on climate change, transforming our organizations with digital and AI, or working to heal a polarized society in which people are deeply wedded to their views, the times we’re living in call for just the kind of mental flexibility described in this book. Now, more than ever, we need to question our assumptions and think again.

Thank you once again, Adam, for expanding our horizons and sharpening our view of what matters most for leaders and for all of us seeking to contribute in this rapidly changing world.

  • Be wary of best practices, which can discourage us from looking again at what we think works. Instead, always aim for “better practices.”
  • Build an atmosphere of “psychological safety,” where employees feel comfortable raising concerns and voicing different perspectives.
  • Keep track of rethinking. Instead of just rewarding outcomes, also take note of how different options are debated throughout the process.

If there was ever a time when the past won’t predict the future, it’s now. Whether it’s battling the pandemic, taking on climate change, transforming our organizations with digital and AI, or working to heal a polarized society in which people are deeply wedded to their views, the times we’re living in call for just the kind of mental flexibility described in this book. Now, more than ever, we need to question our assumptions and think again.

Thank you once again, Adam, for expanding our horizons and sharpening our view of what matters most for leaders and for all of us seeking to contribute in this rapidly changing world.


Demystifying Global Consumer Choice

JANUARY 11, 2021

To BCG’s network around the world,

Making sense of the global consumer market was complex enough before COVID-19, with societal and technological change occurring at a dizzying pace in every corner of the world. The pandemic has added what feels like a layer of obscurity to purchasing behavior that has left business leaders scrambling to understand how to predict the choices people are making and how to position their products and services.

I’m so excited about a recent BCG report, Demystifying Global Consumer Choice, that provides a nuanced understanding of what really drives buying decisions. The report is the culmination of an extraordinary body of research: survey results from more than 15,000 consumers in six markets—Australia, China, France, Germany, Japan, and the US—in 13 business-to-consumer categories.

I had the chance to talk with two of the authors, Aparna Bharadwaj and Lauren Taylor. I hope you’ll listen to the wide-ranging and insightful podcast that captures what we covered, but I’ll share some of the highlights with you here.Consumer needs may stay relatively constant over time, but the context will keep evolving as we adjust to a new reality. It’s more important than ever that organizations establish a highly comprehensive approach to predicting the choices consumers will make. It will be fascinating to follow the journey of global consumer behavior as we continue to update this research over the coming years in the shift to a post-pandemic world.

Please read more about this and other topics, below. Until next week.

  • Adapting to local markets is key. While we have talked about globalization for decades, strategizing at the local level is absolutely essential. Market-by-market differences in consumers’ mindsets and needs are quite broad, not just between regions but also within them—even among millennials and Gen Z. And this proved to be true across categories: one size almost never fits all.
  • Context plays a critical role. Traditional marketing research relies on consumer archetypes, but understanding the context that influences the moment of demand is at least as important. Take car buying as an example. Aparna pointed out that we often hear, “You are what you drive.” In fact, buying a car is as much about context, such as whether it’s a first-car purchase, as it is about personality and attitude. Organizations need to be able to home in on the handful of variables that really matter in specific markets and circumstances.
  • What consumers say they value is not always consistent with the choices they make. Tradeoffs often occur at the moment of demand. For example, the vast majority of consumers agree that purchasing environmentally sustainable products is important. But when they look back at their recent purchases, sustainability is unfortunately often near the bottom of the list of factors in their decisions. Analytically understanding what really drives consumer choice and tradeoffs can make it possible to capture a category in a target market and avoid leaving value on the table.

Consumer needs may stay relatively constant over time, but the context will keep evolving as we adjust to a new reality. It’s more important than ever that organizations establish a highly comprehensive approach to predicting the choices consumers will make. It will be fascinating to follow the journey of global consumer behavior as we continue to update this research over the coming years in the shift to a post-pandemic world.


Harnessing the Three Powers of 2020

DECEMBER 15, 2020

To BCG’s network around the world,

Several months ago, Ed Bastian, CEO of Delta Air Lines, shared a great observation he heard from our mutual friend and the chairman of Delta’s board Frank Blake: Crises don’t build character; crises reveal character. I’ve been thinking about that notion a lot as we head toward the end of this extremely tragic and tumultuous year.

My colleague Marin Gjaja, whom I’ve worked with all year long on BCG’s COVID-response efforts, framed the idea of three powerful forces that have come to the fore in 2020 and will continue to profoundly shape how we move through the decade: technology and innovation, integrative thinking, and human connection.

With strength of character, leaders can harness these as powers to accelerate progress within their own organizations and solve some of society’s biggest problems, all of which will be with us long after we’ve conquered this disease.

First, the power of innovation and technology to break down barriers to equity.

This period didn’t recast the role that technology and innovation will play in the future, but it highlighted and accelerated how they can solve our most difficult challenges and improve business, economies, and our lives. Our dependency on technology became singular and extreme in our personal and work lives almost overnight. Everything flipped online, from school to work to shopping to socializing. I could never have imagined leading BCG for nine months while sitting at my dining room table.

We found ourselves intently waiting for technology and innovations to bring us diagnostics, vaccines, and new treatments in record time—and to get our lives and the economy back to some semblance of normal. And the progress has been incredible, including most obviously highly efficacious vaccines created, tested, and in market in less than a year, when in the past it would have taken five-plus years.

But none of these achievements will ultimately be successful if only a narrow slice of the world’s population benefits. Access is everything—access right now to testing and PPE, to vaccines as they are rolled out internationally, to high-speed internet for education, information, and opportunity.

This year has drawn much-needed attention to the world’s deep inequities, and technology has the power to act as an equalizer. It’s our responsibility as leaders—whether in the public or private sector—to help broaden that access and level the playing field.

Second, the power of integrative thinking to tackle climate change.

We’ve seen this year that focusing solely on single dimensions, attempting either to save lives or preserve livelihoods, has kept us from winning the fight against the pandemic in the US and other parts of the world. Instead, we’ve needed to recognize the linkages and interdependencies of the problems at hand, balancing epidemiological and socioeconomic risks, or “epinomics,” to keep people safe and preserve jobs and the economy, while we prepare for broad distribution of vaccines.

Entering 2020, before COVID rightfully grabbed attention and resources, there was increasing awareness of the urgency of the climate crisis. Entering 2021, we need to apply the same kind of integrative, cross-boundary thinking to fight climate change as has been required to defeat the pandemic.

This includes public and private sectors working together; concrete plans to curtail all types of emissions and to neutralize what we can’t curtail; a sensitivity to the economic implications of our choices, particularly those affecting jobs and communities; the application of nature-based, engineered, and market-oriented solutions; and, underneath all of this, the goal of a just transition, ensuring that those most vulnerable to the changes to come are taken care of.

The good news is that we begin 2021 with bold ambitions from China, a committed incoming US president, and an action-oriented Europe. It’s the best starting point entering any year since the Paris Accords were signed. Now it’s up to us to leave 2021 with big progress toward implementing integrated approaches to tackle this existential challenge.

Finally, the power of human connection to transform our organizations, support our people, and renew our sense of purpose.

The dichotomy this year has been striking: we’ve been forced to stay physically apart, but in many ways we have never felt closer to each other. We feel we’ve walked into one another’s homes, met families and pets, and talked about art on the walls or the view outside. We connect in more authentic ways about the stresses we are feeling and the pressures we face.

I know that because I miss the physical connection—handshakes and hugs, celebratory meals with clients and colleagues, visits to BCG’s offices in every corner of the world—I’ve been more deliberate in reaching out and finding new ways to connect. Not being able to be together physically has reinforced just how important human connections and aligning on purpose are to us—and how powerful they can be in motivating us to do our best work no matter where we are sitting.

My colleague Jim Hemerling has written a lot about transforming with “head, heart, and hands.” While the pandemic has required all three, it has put a disproportionate focus on “heart.” I know of so many examples of executives taking care of their people this year, recognizing how much individuals are struggling and leading with empathy and humanity to offer support and a sense of community and purpose when people can’t be together. We need to continue to value the power of these deeper connections and their ability to unlock human and organizational potential long after the pandemic is over.

***

It’s our job as leaders to collectively commit to using these three powers to make progress on the toughest challenges facing society and businesses. Think of this commitment as a torch—lit with great force in 2020 and to be carried forward by all of us into 2021 and beyond, helping to light the torches of others as we go.

Back to Frank Blake’s reflections about how crises reveal character. This year has revealed so many among us who are driven by purpose, values, and a constant willingness to learn and adapt—whether we think about the courageous work of doctors and nurses, those delivering our packages and food, or the people we’ve worked with day in and day out. Many leaders, though not all, have also displayed enormous character under tremendous strain.

I’m particularly proud of the character I’ve seen among so many BCGers this year. I watched individuals and teams engage collaboratively with our clients and run straight at some of the hardest problems that 2020 brought—focusing together on having a positive, valuable impact on both businesses and society. I also feel we have been privileged to work with so many of you on these journeys, and I’m grateful for the trust you have invested in us.

Please see below for some publications I hope you’ll find insightful on the current state of the world’s fight against COVID and opportunities to move ahead positively. I wish you a restful, safe, and joyous holiday break and will be back in touch in the new year.


    A Call for Boldness and Bridge Building

    NOVEMBER 9, 2020

    To BCG’s network around the world,

    Each week when I write to you, I try to do it from a global perspective, despite my eight-month physical confinement in New York. Today, following a truly remarkable US election, I am writing to you as an American.

    Now that we have an announced result in the race for president, we can take stock of the past few weeks—and I think there’s a lot to feel good about: extraordinary turnout on both sides, peaceful political expression, what thus far appears to be a clean and effective process of voting and vote counting (particularly impressive during a pandemic), and inspiring dedication from election officials, volunteers, and state and local officials.

    The business community has also played a very positive role: encouraging election participation, acting as a voice of moderation, and now supporting the validity of President-elect Biden’s victory, along with other outcomes in which candidates of all political stripes have won hard-fought campaigns. Social media companies stepped up dramatically; we’ve seen a strong effort to reduce the propagation of false and misleading election information, and very few signs of election interference.

    So where do we go from here? We’ll hear many ideas in the days to come. Personally, I would like to suggest that this moment calls for bridge building and boldness.

    The divisions in US politics have always been substantial, but they have become much starker in recent years. We cannot go on like this. The problems we have to tackle are too big and the stakes too high. In his initial post-election speeches, President-elect Biden has focused on bringing us together. This will not be easy, and it requires an openness from both sides, but it is a requirement if the US is to create a society able to tackle 21st-century challenges and contribute globally to advancing progress.

    Along with building bridges across the political divide, there is a requirement for bold change. Bold does not mean radical. This election firmly anchored the US in the center of the political spectrum with a closely divided Congress. But the center can and must be bold, too. Here’s some of what we have to do:We can’t accomplish these goals if we remain as divided in the US as we have. We’ll need Democrats to compromise on some of the promises they made to their base during the election. We’ll need Republicans in the Senate to be open to compromise in the short term even as they work to regain the presidency in 2024.

    Through all this, the business community has an essential role to play. Over the past year, the Business Roundtable has advocated for practical, ambitious, and balanced policies aimed at each of the areas above. These policies are unlikely to gain the support of the extremes from either party but can contribute to a dialogue designed to open up space for compromise and progress.

    Business leaders individually must also do their part. With last week’s outcome, businesses will likely continue to benefit from low taxes, low interest rates, and—I hope soon—another stimulus package that will preserve the economy and individual livelihoods through the depths of an ongoing pandemic. In turn, we must each take on the responsibility not only to drive our own performance but to support agendas that strengthen the economy and society, act with purpose, and speak with moral clarity and authentic leadership.

    I am not naïve about the road ahead. But at this pivotal and transitional moment, and following a year filled with challenges, I choose to be both bold and hopeful.

    • Gain control of the pandemic in ways that respect the need to preserve both lives and livelihoods, and accelerate vaccine rollout and uptake during 2021.
    • Adopt a climate agenda grounded in market economics, innovation, and job creation that can make dramatic progress toward a net-zero target by the middle of the century.
    • Pursue an infrastructure agenda that leverages both the public and private sectors to rebuild our physical infrastructure and boldly address the digital divide that holds so many back in rural and urban communities.
    • Design an immigration plan that builds on the compromises that were nearly enacted a decade ago.
    • Speed up progress on racial equity and reforms to criminal justice with appreciation and respect for law enforcement, and push hard for diversity and inclusiveness across business and society.
    • Build on the successful enactment of President Trump’s bipartisan-supported US-Mexico-Canada Agreement, to pursue more 21st-century trade deals.

    We can’t accomplish these goals if we remain as divided in the US as we have. We’ll need Democrats to compromise on some of the promises they made to their base during the election. We’ll need Republicans in the Senate to be open to compromise in the short term even as they work to regain the presidency in 2024.

    Through all this, the business community has an essential role to play. Over the past year, the Business Roundtable has advocated for practical, ambitious, and balanced policies aimed at each of the areas above. These policies are unlikely to gain the support of the extremes from either party but can contribute to a dialogue designed to open up space for compromise and progress.

    Business leaders individually must also do their part. With last week’s outcome, businesses will likely continue to benefit from low taxes, low interest rates, and—I hope soon—another stimulus package that will preserve the economy and individual livelihoods through the depths of an ongoing pandemic. In turn, we must each take on the responsibility not only to drive our own performance but to support agendas that strengthen the economy and society, act with purpose, and speak with moral clarity and authentic leadership.

    I am not naïve about the road ahead. But at this pivotal and transitional moment, and following a year filled with challenges, I choose to be both bold and hopeful.


    A BCG Playbook for Our Times

    OCTOBER 5, 2020

    To BCG’s network around the world,

    BCG has been writing about business strategy for more than half a century, picking up on moments of great change and offering fresh ways to head into the future. A perfect example is Competing Against Time: How Time-Based Competition Is Reshaping Global Markets, which Apple CEO Tim Cook was still giving to colleagues decades after it was published in 1990. And Blown to Bits: How the New Economics of Information Transforms Strategy, published in 2000, let us know how the information economy would change our lives and whole sectors of the economy.

    I’m excited to share the news that our next book is here: Beyond Great: Nine Strategies in an Era of Social Tension, Economic Nationalism, and Technological Revolution. In this book, which touches on so many of the themes I’ve been writing to you about in recent months, BCG’s Arindam Bhattacharya, Nikolaus Lang, and Jim Hemerling explain how the choices that business leaders face today are more complex and present greater risks and returns than those of the past. As a result, the approaches that have helped companies become and stay great are no longer enough.

    The societal and economic crisis we’re living through has only added another layer of stress and challenge. But difficult environments are often fertile periods for innovation and transformation. Beyond Great provides a playbook—a set of nine fundamental strategies that are not just meant to be used when times get better. These are urgent priorities for right now.

    What I love most about this book is that the authors share real-life examples of companies that are making these strategies work. If you’re like me, you’ll be fascinated by the fact that most of them are not the digital natives that garner so much attention but incumbent firms in manufacturing, agriculture, consumer products, and other more traditional industries. The authors tell us that any leader can cultivate practices that will foster the transformation skills and mindset required to go beyond.

    Now is not the time to be timid, no matter how daunting today’s challenges seem. Beyond Great not only shines a light on what will define success throughout this decade but provides a playbook for becoming more responsive, sustainable, successful, and resilient in highly volatile times. I hope you’ll enjoy it as much as I did.

    Please find links below to more information about the book, as well as other related content. Looking forward to connecting again next week.


    Ensuring AI Lives Up to Your Values

    SEPTEMBER 8, 2020

    To BCG’s network around the world,

    Artificial intelligence holds enormous promise for all stakeholders: better performance for companies and superior and more personalized products and services for customers. For many businesses, it’s a capability that has only grown in importance since the pandemic began.

    But we’ve seen serious downsides, too. For example, there have been equity issues in AI algorithms used for housing and mortgage offers, as well as in recruiting and hiring, because of racial and gender biases baked into the data on which the algorithms are based.

    At BCG, we believe deeply in the power of AI at scale to transform businesses and deepen customer relationships. But we also recognize the enormous responsibility that comes with using AI. Like most of you reading this, I’m not a data scientist. Trying to figure out what is underneath different algorithms and how to determine the appropriateness of the results they produce seems very daunting.

    My BCG colleagues have written a new article that not only highlights the core principles of responsible AI but also gives six steps for putting these principles into practice—measures you can start without massive investment, evolving them over time. They are designed to ensure that companies can walk the talk on responsible AI, translating intent into reality. Underlying these steps are two concepts that I believe should be at the heart of all corporate leaders’ decision making.

    The first is the notion that companies must become increasingly bionic as they strive for long-term success. This means rapidly adopting emerging digital technologies but getting the most from them by integrating human strengths. Responsible AI needs responsible AI leadership—a diverse internal team with their hands on the pulse of all AI initiatives. It takes people to make sure that AI systems are robust and people to be aware of all the ways those systems might fail.

    Also essential to building responsible AI is aligning initiatives with the company’s corporate purpose—the intrinsic values of the organization and the positive impact its leaders and employees hope to make. If AI is grounded in purpose, the organization is better positioned to build the transparency and earn the trust needed for sustainable success.

    I hope you’ll find the practical steps of this article useful as you navigate the requirements for building responsible AI into your organization. It’s featured below, along with related content I’m also pleased to share with you.


    Navigating the New Reality of Global Trade

    AUGUST 3, 2020

    To BCG’s network around the world,

    I’m Nikolaus Lang, senior partner at BCG and leader of our Global Advantage practice. This week, I’m stepping in for Rich to share my thoughts with you about the state of global trade. It’s a landscape that started shifting in the mid-2010s, has been struck hard by the pandemic—and will never look the same again.

    Since the Bretton Woods Conference in 1944 and the end of World War II, large parts of the global economy profited from sustained growth, fueled by international cooperation and increasingly liberalized global trade. Since the mid-2010s, geopolitical shifts such as Brexit and frictions between the US and both China and the EU have threatened the spirit of global free trade.

    In addition to these geopolitical shifts, COVID-19 has triggered two other negative effects on global trade. First, the pandemic quickly led to falling demand and a global recession, which historically causes significant declines in trade. Second, national and regional lockdowns, controls on shipments arriving at ports, and export bans on some medical and agricultural products disrupted existing supply chains.

    According to our simulations, the combination of geopolitical shifts, economic recession, and new supply chain structures is likely to lead to a short-term decline in global trade of 20% to 30%, with full recovery unlikely before 2023. The numbers are stark. According to our baseline economic scenarios, two-way trade between the US and China will have shrunk by about $128 billion in 2023, or around 15%, from 2019 levels, and EU trade with China by about $30 billion. At the same time, ASEAN, India, and North Africa are likely to benefit from these shifts.

    The graphic below shows the change in volume of traded goods, represented in billions of dollars, in major corridors from 2015 through 2023.

    So, while trade might return to absolute 2019 levels in 2023, international trade routes will be changed forever.

    Business leaders must act now to adapt to this emerging new reality. It’s time to reassess global manufacturing networks, supply chain structures, and supplier panels. While it is a complex road ahead, I am confident that companies that build deep resilience into their supply chains and take a fresh, holistic view of the future of global trade will thrive in the post-COVID world. See below for some of BCG’s latest thinking on this topic.

    Nikolaus Lang
    Managing Director and Senior Partner


    Can Remote Work Pave the Way for New Global Leadership Models?

    JULY 12, 2020

    To BCG’s network around the world,

    Leaders have had to deal with massive challenges over the past few months, but there have been some positive surprises. Many of us, for instance, have recognized the effectiveness and benefits of remote working for our organizations and ourselves—a shift that got me thinking about what this can mean for leadership teams.

    In an environment in which the fundamental nature of globalization is being challenged, can remote work make a distributed global leadership model more accessible? Can it transform the ways we run a business so that leadership teams are closer and more cohesive, even when their members are scattered around the world?

    The notion of a globally distributed leadership team has been business-as-usual at BCG for as long as I can remember. Because of that, we’ve always brought our executive committee together in person four times a year, to share perspectives and set the direction for the firm. In addition, it has been important to me and my predecessors to travel to as many of our offices as possible, connecting with clients, staff, and our partners around the world.

    When we were first confined to our home offices four months ago, I was skeptical that we would be able to stay connected, learn and innovate, and maintain the culture and values so deeply rooted in BCG. But now I find we’re working together as a team better than ever. Of course, some of the success we’ve had with going virtual is a result of strong relationships built through in-person meetings over many years. But there’s something uniquely effective about the way we’re collaborating right now.

    From my home in New York, I’ve connected with thousands of my colleagues face-to-face, conducted meetings with dozens of leadership teams, and engaged with hundreds of CEOs around the world. We may be missing some of the informal elements of in-person meetings, but in many ways these conversations feel more up-close and intimate than the ones we have in large conference settings or formal offices. And the spirit of collaboration can be just as deep.

    We are at the early stages of this virtual journey, but I am excited about the opportunities. Understanding local dynamics, particularly in major markets, is essential these days, and a distributed leadership team gives companies on-the-ground access around the world. It also opens up new ways to create diverse teams and shape careers.

    Please see below for some of our latest thinking on leading in the new reality, including our new installment in the COVID-19 BCG Perspectives Series. I am also sharing an important new article on the essential requirements and policies to protect the vulnerable. Next week, I’ll be focusing on how to build a more resilient business.


    Personal Reflections—and Introducing the New Reality Weekly Brief

    MAY 20, 2020

    Dear colleagues,

    As we begin to break the surface on a post-COVID world, questions and uncertainties abound. In an effort to help make sense of our new reality and ensure we are proactively sharing our latest knowledge and insights, we are launching a weekly digest for our core communities, including clients, alumni, and staff. You will automatically receive these updates, and we hope that you will find these perspectives useful in the months ahead.

    This email is the first in a series that will arrive in your inbox every week from me or one of my BCG colleagues. Maintaining close connections with leaders around the world feels more important to me today than ever before. Even though we are more distant from one another physically, I feel we are much more connected as we adapt to this health crisis and dramatic disruption to the global economy. I’m pleased to share some of our perspectives and insights with you, along with some personal reflections, as we work together to shape a new reality.

    One of the most pressing issues is how to restart the economy safely, effectively—and without having to shut it back down again in the near future. As we move into this next phase, we’ll be counting on governments to provide clear guidelines and oversee the smart execution of prudent timelines and new processes. But progress also depends on the resilience and adaptiveness of business, something we’ve talked about at BCG for quite a while but whose importance is now front and center for all of us.

    This is a fight—a fight against the virus and a fight for our future. Businesses have to prepare themselves for a battle that isn’t about a one-time change but instead consists of ongoing shifts and the ability to rapidly evolve. Over a year ago, I coauthored an article on winning the ’20s. In it, we discussed the imperative to increase the rate of learning, arguing that advances in artificial intelligence and dramatic increases in data would create a source of competitive advantage for organizations that could draw better insights, rapidly translate those insights into action, and adapt those actions in real time to continually drive greater impact.

    We described this imperative as playing out over the course of this new decade, but COVID-19 has collapsed this timeline from years to months and weeks. Right now, we need to build control towers to rapidly adapt to a virus that will rear its head in unexpected places, quickly understand and react to changing customer behavior, and adjust offerings and restructure businesses to reflect new conditions around the world. We must also build new, resilient models—from supply chains to balance sheets—that reflect the greater uncertainties in the world.

    I wish we could all be thinking about how to get back to normal, but we will be far from normal for many months to come and instead must look to lead in a new reality. At BCG, we’ll work through the toughest decisions with you as the post-COVID world starts to emerge. Learn more here about leading in this new reality and creating advantage through resilience as well as other priorities we think leaders should be focusing on now. I’m including more insights below—ideas that I hope you’ll find helpful as we navigate through these complex times.

    And as we all know, sometimes a conversation to talk through an issue is worth more than lots of emails and written perspectives. If you want to connect, please reach out to us. My colleagues and I value your trust in us and would be delighted to engage with you on the difficult and sensitive issues you are wrestling with. We may be apart, but we are in this together.


    Weekly Briefs from CEO Rich Lesser

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