Course Preview | Business Leadership in the Age of Disruption from Kellogg Executive Education
4:32 min
32
Welcome. My name is Sérgio Rebelo. I teach International Finance at the Kellogg School of Management. My interest in both research and teaching is to help companies thrive in a global economy that's undergoing very large structural transformations. My goal is that by the end of this program, you and your company can position to take advantage of these structural changes. I would like to share with you two ways of framing a lot of the material that we're going to discuss. And the first way of framing that material is to talk a little bit about the game of chess. As I'm sure you know, no human can anymore beat these software programs that have been designed to play chess, programs like Stockfish. Why do humans lose to these software programs?
Well, there's a variety of reasons. First of all, these programs have a lot of memory, so they can memorize openings and closings of games. The software can also do a lot of computations, can see many moves ahead. And so, it has a better chance of choosing a better move. But there's a third reason why we humans lose, and that's perhaps the most interesting reason. One reason we lose is we wrap our play around the story. For example, perhaps I wanted to conquer the center of the board. And what is interesting is that we often make plays that no longer makes sense to justify that story. You see, perhaps I lost two bishops, so I can no longer conquer the center of the board. So, we keep on making plays just to justify prior place. That's not how computers play the game of chess at all. A computer has no emotion. So, the computer is not going to fret about the fact that we just lost the bishop. The computer is going to look coldly at the board and see what is the best that I can do from now on. Perhaps the computer just lost the queen which is a devastating loss in chess. No matter, the computer is going to look at the board and ask the question, what can we do from now on now that the board is the way it is? That's an attitude we should embrace for ourselves and for our companies. So, as we go through this program, I urge you to think about the question: Now that I see this board in front of me, what should I do in terms of my career, and what should my company do in terms of its products and positioning?
That's a very important attitude. The other element of framing that I would like to share with you is what some people call Dornbusch's law. Rudi Dornbusch was a professor, a charismatic professor at MIT. And you like to say things take longer to happen than you think they will, but then they happen much faster than you thought they could. Here at Kellogg, we see many companies that understand that digitization is increasingly important, that artificial intelligence is going to be a very important part of the business future, that climate change is a very important challenge. But they say, well, there's still time, we still have customers, we still have our ways of doing business. There will be time for us to adapt. But when change happens, it often happens much faster than we thought it could. And so all of a sudden, we might not have space. There might not be space for us to position. It is simply too late. So, I hope that going through the material in this program will create a sense of urgency, a sense that you need to act, you need to make changes now if you want to position yourself, your career, and your company for the future.
We're going to talk about a variety of themes. We'll start by discussing the polarization of consumer demand into value and luxury that has to do with the demise of the middle class. We'll talk about digitization and also the creation of platforms, and the incentive the brands are having to sell directly to consumers (D2C). Then we'll discuss the second wave of globalization which will involve services like healthcare, education, and banking. Then we'll pivot to discussing artificial intelligence, which is the technology that's likely to power the fourth industrial revolution. And finally, we'll discuss the challenges of climate change. This program is an opportunity to reflect about the large changes in the world economy and the impact that these changes have on your business and on your career. As we go through our time together, I invite you to design a playbook about how you and your company should react to these changes.
Well, there's a variety of reasons. First of all, these programs have a lot of memory, so they can memorize openings and closings of games. The software can also do a lot of computations, can see many moves ahead. And so, it has a better chance of choosing a better move. But there's a third reason why we humans lose, and that's perhaps the most interesting reason. One reason we lose is we wrap our play around the story. For example, perhaps I wanted to conquer the center of the board. And what is interesting is that we often make plays that no longer makes sense to justify that story. You see, perhaps I lost two bishops, so I can no longer conquer the center of the board. So, we keep on making plays just to justify prior place. That's not how computers play the game of chess at all. A computer has no emotion. So, the computer is not going to fret about the fact that we just lost the bishop. The computer is going to look coldly at the board and see what is the best that I can do from now on. Perhaps the computer just lost the queen which is a devastating loss in chess. No matter, the computer is going to look at the board and ask the question, what can we do from now on now that the board is the way it is? That's an attitude we should embrace for ourselves and for our companies. So, as we go through this program, I urge you to think about the question: Now that I see this board in front of me, what should I do in terms of my career, and what should my company do in terms of its products and positioning?
That's a very important attitude. The other element of framing that I would like to share with you is what some people call Dornbusch's law. Rudi Dornbusch was a professor, a charismatic professor at MIT. And you like to say things take longer to happen than you think they will, but then they happen much faster than you thought they could. Here at Kellogg, we see many companies that understand that digitization is increasingly important, that artificial intelligence is going to be a very important part of the business future, that climate change is a very important challenge. But they say, well, there's still time, we still have customers, we still have our ways of doing business. There will be time for us to adapt. But when change happens, it often happens much faster than we thought it could. And so all of a sudden, we might not have space. There might not be space for us to position. It is simply too late. So, I hope that going through the material in this program will create a sense of urgency, a sense that you need to act, you need to make changes now if you want to position yourself, your career, and your company for the future.
We're going to talk about a variety of themes. We'll start by discussing the polarization of consumer demand into value and luxury that has to do with the demise of the middle class. We'll talk about digitization and also the creation of platforms, and the incentive the brands are having to sell directly to consumers (D2C). Then we'll discuss the second wave of globalization which will involve services like healthcare, education, and banking. Then we'll pivot to discussing artificial intelligence, which is the technology that's likely to power the fourth industrial revolution. And finally, we'll discuss the challenges of climate change. This program is an opportunity to reflect about the large changes in the world economy and the impact that these changes have on your business and on your career. As we go through our time together, I invite you to design a playbook about how you and your company should react to these changes.
