🎬 Video 1 — ZOOM MGMT-S31 | Prof. Ragil Ratnam

you you you you you you you Ready, right?

Okay, so usually I plan to start with a kahoot quiz at about between 3 and 5 past, so And it's one way to and and the kahoot quizzes count for your for your final mark Not so much getting it right but participating When you sign up for the kahoot, you guys have all done kahoot before, right?

Use the use the QR code or the or the little Code to go on to the website.

We'll share it with you in a moment and Once you are in Please put your name as either your real nickname or something that we recognize you as because it's recorded So we know who's actually done the kahoot quiz.

If your name is not signed into the kahoot quiz You lose a point for attendance On that day Okay So welcome guys this doesn't look like 60 people is it Let's see, huh Around that number.

Okay, great.

Well, welcome Welcome to your first course at Sassin.

I will talk a little bit about it In a moment and I'll introduce myself and do all of that fun stuff.

I would like to last to start off with a quiz So this course is on business strategy But this quiz is a little bit on strategy, but a little bit on general knowledge I don't expect you to get all of it, right, but as You saw on the slide as you were coming in This little capybara that I have specifically chosen for your class if you win the kahoot You get one of these one for each class is available and When you submit it back to me you get one point extra on your total grade Okay, so There's a little bit of motivation and incentive to do the quiz.

Okay, we can get started.

Thanks.

Yeah Ching-ching you should be able to access online the the QR.

Okay.

I can see you in the background.

Welcome You Okay Thank you, how well do you know each other that's a question I'm going to ask you in a moment I feel like a celebrity Miller with that porch pointing at me You You You Question number one is What does the name sassin stand for because I've just been through orientation, right Very good Sasa Indra in Sanskrit the king of the rabbits All right.

I'm sure they told you many times why we're called the king of the rabbits, right?

Okay Great let's see who got that fastest and correctest Hi, where's time?

There you go.

Excellent work.

Hi.

Good good.

So you sit let's see if you can keep your lead Okay, and only coming up behind which tea shop in Taiwan originated bubble tea There's one for entrepreneurship and innovation Correct is number two.

Hey, how many of you drink bubble tea most of you I assume, right?

I mean it became a craze for a quite a long and and it's still doing pretty well here But there are different companies that have now taken the lead in that business.

Okay, let's see who got that Okay, so you're the first one Okay, so you're the first one Okay, so you're the first one Right Excellent Nice nice nice.

Okay, let's see Next question question three of four, what does ASML produce?

It should be a very very well-known company to all of you studying business How many of you have not heard of ASML ASML is the only company in the world that produces the photolithography machines that produce Semiconductors So it supplies NVIDIA and it supplies Siemens and it supplies Intel it supplies everybody It is the only company That does it so it's a very important company in our current economy It's a Dutch company very useful to know who they are.

Okay.

In fact when you do digital digital something AI or digital transformation or something with Alvin who's a friend of mine?

He does some work with ASML at the moment so you can ask him about them Okay, let's see who's ahead now before the final question pin.

Where's pin?

pin there Okay, excellent Final question who is BCS?

Okay, which industry contributes the largest share of Thailand's exports should all know this right Rice tourism electronics textiles Seriously guys, how backward do you think our country is?

What do you think we just sell rice Well, think about it does anyone know which is the largest company on the so who's who's from set here There you go, so Largest company on set is Delta what Delta electronics, right?

50 to 60 percent of Thailand's economy is based on OEM manufacturing 50 to 60 percent of Thailand's economy is based on OEM manufacturing of which a large chunk of that is electronic In fact, I I believe almost all the Nikon camera boxes are made in Thailand The lenses are not made here, but all the Nikon cameras are made here.

I mean 80% I don't know if you guys were I mean you guys are a bit older than the MBAs, right?

do you remember the floods in 2011 in Bangkok, right and in the Nearby areas I don't know if you noticed but when those floods happened, especially in a utah and rayon Computer memory prices went up by 30% Why?

Because Thailand produces 80% of all hard drives in the world Something we should be proud of Seagate Western Digital they all produce here right, so That's why it's when things like that happen.

It can cause serious problems, right because they are Geolocated.

Okay.

So yes, right rice and agriculture is about 15% maybe tourism about about the same But really the bulk of it is electric textiles and garments negligible, really Okay Next let's see.

Who's who's up.

This is a final question.

So the winners are third place Winning nothing pin good work Okay, is it juke or jug jug, okay great and the winner is pink Right in the middle at the back there so Keep this and You will get 1% when you return it what to add to your total mark So if you're on the edge of a grade it might help Okay So that's how we're going to start every class quick quiz right So make sure you register for that if you want your friends who are not here in time to do you can you can send Them the QR code.

I don't know if they're on their way here, so The course is called management and business strategy, is that right?

Okay, cool.

I'll need to correct that but welcome to your first class at sasim.

I Am really delighted.

I've been I've been fighting for a long time to have strategy put right up front in the in the course curriculum Because I think before you do things like finance and marketing and all of those things I think it's really important to have a big picture of How business works and how you can run your business is better and you can then use Finance and all of those other things as tools to improve your business My perspective is strategy is should be an overview of what business stands for Okay now the way I work is I Am I try not to talk too much.

There will be lots of group work that you'll be doing And you'll be feeding back to us from tomorrow.

I'll make sure there are flip charts in the room Today, we don't need them because I'll be asking you to work in your groups And in fact, I'm going to ask you to set up your groups in in just a moment so What is this course about?

We've got two people whose titles say strategy, right?

In fact three people Who has a title that says strategy?

I was looking at your business class Who has a title that says strategy I was looking at your business cards Like head of strategy of somewhere and somewhere Who?

Tom what's your title?

Assistant to CEO in CIT Excellent.

Who else?

Who else is a strategy expert?

No one do I need to find them Joong right?

Yes.

Yeah, I remember your name Okay Corporate strategy, why are you hiding at the back pretending you know nothing about strategy?

These are the people that you're going to turn to All right As you as you do as you do your work So I like this quote the essence of strategy is choosing what not to do Michael Porter is known as one of the key sort of thinkers on on business strategy over the last 30 years at Harvard So let's start off with a little bit of introduction how well do you guys know each other do you think If I were to ask you to name Everyone else in the class what percentage of the class do you think you would get?

100?

Anyone?

Anyone?

100?

80?

I haven't even met you and I've got like 90% This is this is your opportunity to get to know everyone right and so I'm going to give you a chance to do that In just a moment, but this is me So I'm I've trained as a clinical psychologist a very very long time ago in South Africa I was born in Sri Lanka grew up in Zambia moved to South Africa in my teens That's where I finished my education and started my career My current role is Actually, the title has changed.

I'm now head of custom instructional design my full-time job at Sassin is executive education where I Do business development and I design programs and I deliver programs for various corporate clients around Thailand and Some across Asia I also have a small company that that I run to do leadership advisory Which is the company I set up when I first came here 15 years ago And I also do other work for other executive education organizations I used to do a lot of work for duke now emeritus headspring, which is an exec ed company That's owned by the financial times.

My core focus areas are these I teach i'm going to be teaching a Turbo course on negotiation in november, but my my main course here is a core course of of strategy Which is what i've been doing for the last i've been with sasson since since covid so 2020 end of 2020 I would say And I must say my experience is I teach both the mbas and the embas and what I really like Teaching you guys is that you come with such a wealth of experience already That will really help you understand these concepts and implement them in your workplace, right because my aim For this course for you Is that you walk away with some practical skills and tools that you can use immediately as you think about your companies You know, I don't want this to be a theoretical exercise I've got you've got the textbook.

You all have the textbook, right?

The text I will expect you to read the textbook.

It may be included in some in some quizzes and things but really I don't teach out of the textbook in the classroom because then I might as well not be here, right?

My aim is to try and bring strategy to life by sharing some examples with you sharing some stories with you And then getting you to try and use those in the way you think about your company and your context okay, so Please feel free to ask questions Please feel free to disagree with me and challenge me If as long as you have a rationale for it I'm fine Being challenged.

I'm not i'm not fragile Okay So so these are some of the clients that i've worked with.

Um There's a lot more I just put a few in there some of the more recent ones okay, so I was going to ask you to find out as much about the businesses of all your classmates as you possibly can but I'm Let's skip that for the moment, right because i'm going to get you to go into your groups and you'll do that in a moment as well So the core structure is introduction to strategy and I will introduce you today To one of the key frameworks that That will help you in thinking about strategy and that's the hamburg strategy diamond, right?

Which talks about five dimensions of strategic choices that you need to make We then talk about setting strategic direction and there we really focus on purpose vision mission understanding why the company exists And why it does what it does before you start thinking about How you do it is really really important.

So i'd like us to spend Some time on that.

We'll do that tomorrow Uh, then we will do strategic diagnosis of the company of the external environment and there we will use i'm sure you're familiar with some of these pestle and porter's five forces and I'll be doing some foresight work with you.

That's just a Picture of the future's wheel, but i'll be doing some uh, some foresight work with you to start thinking about How do you think about the future?

right Then we'll do some internal diagnosis.

SWOT is a very very common tool that that you probably are all familiar with I also find that many people don't use it as effectively as they could and there are Things to think about in your criteria that will help you make SWOT something that's useful that you can use Actively in your workplace, right?

then I will talk something that I introduced a couple of years ago is this idea of Competitive positioning and there I will introduce you to the the seven strategic powers by Hamilton Helmer who's uh I think he's faculty at MIT now, but he used to be a very long-serving consultant at Bain and he identified seven approaches that allow your company to be Sustainably competitive over the long term not just by having advantages over others But also having a barrier that prevents others from from catching up with you, right?

Whether it's IP or whatever it is and we'll talk about those Because those can be very useful for thinking about how your company manages Manages its business into the future.

We'll spend some time on executing strategy Because it's all well and good to have all of these wonderful ideas and thoughts but You then have to make it real right um Hang, is that right?

Okay, good You need your card But it's okay for now no need to get it it's okay As long as I know who you are.

Okay, so So this is what we're going to do for the for the first six lectures the seventh lecture is your group presentations Which is your assignment that counts for I think 20 percent of your overall grade and so i'll get you to choose your Your grades now, uh your your your groups in just a little bit Today, we're just going to get to know each other a little bit for this first half And then we'll go into some content a bit later.

Okay So today we're going to do introductions.

What is strategy?

What makes a great strategy thinking strategically course assignments and evaluation?

So i'll give you what you need to to do well in this course In a little bit you should have all of that in your syllabus anyway, but i'll just remind you of that, right?

But what i'd like you to do i've told you what I want from this class What do you so you've seen the course outline?

What do you want to know or do at the end of this course That maybe you think you cannot do now or cannot do as well now You don't need to share it with me.

I'd just like you to make a note And in fact, I think uh our course secretary jerry should have sent you a link on um uh on in the line group and It should be in your sassinware as well.

There's a google doc and you can answer the question there What is it that you want to learn?

What do you want to walk away with?

right So maybe you can take a moment and see if you can find the google doc and um, just complete just a couple of sentences for yourselves um because what i'd like at the end of it is for you to Look back on the course at the end of this and see did you achieve what you wanted to achieve, right?

Okay Take a

A minute to think about it.

Everyone find it okay?

Or you can find it later, just you can write it down somewhere else for now.

Anyone like to share what they would like to get out of this course?

All so shy.

Hey, please use the mic because I'll tell you why we use the mic is because these courses are recorded just in case people miss the class and they need to review and so on.

What I want at the end of the course is to be able to evaluate my current business, my current family business, and then plan for the five and 10 year in the future.

Because we are in a very competitive market because we have a lot of customers in our sector.

My family business is that we produce ham, bacon, sausage in Taiwan, German style.

And there's a lot of competition.

There's a lot of new players coming in.

And one of our main competitors is like 10 times bigger than us.

So I think for us, either we get big or we get bought over.

So it's quite difficult for us to be perfect.

In fact, your whole assignment will be about that.

So you will have the opportunity to use all of this stuff to think about what your strategic plan is.

Okay, anyone else?

Okay, I'll get you talking later.

All right, so raise your hand if you're in a startup right now.

One, two, three, four, five.

So about less than 10%, right?

Wow, small, usual, right?

How many of you are in a family business?

Okay, about 50%, 50, 60% maybe.

How many of you in corporate?

Okay, a good 40%.

Okay, nice.

So it's about the usual mix.

Now, why do I ask you about this, right?

The reason I ask you about this is because the challenges that you face will be similar in some ways and different in other ways.

But the reality is if you're in a startup, you need to know that more than nine out of 10 startups fail.

You probably know this already, right?

And according to the latest data, up to startups take two to three times longer to validate their market.

And founders tend to overestimate the value of their IP by 250%.

So what you think you have is valuable may not be as valuable as you think it is.

And often you need to pivot at least once to find the right market, right?

So that's what strategy can help you do.

How about corporates, right?

This chart shows the average age of companies on the S&P 500 in those years, right?

Oh, by the way, slides.

I know people ask about the slides.

My approach is to share the slides with you at the end of the class, okay?

Because it's not going to be helpful for you to have it.

If you've read the textbook, you'll be fine knowing all of this information.

Everything else you will have after the class, okay?

So it shows that in the 60s, the average age of a company large enough and successful enough to be on the S&P 500 was about 60 years.

Today, the average age is about 12 years.

So what does that tell us about business success?

How do you think it's changed?

What do you think?

Yes, Soojin, go ahead.

I can guess that there's a trend in the world that changes pretty quickly.

So a company comes and goes.

So companies don't last as long as they used to.

That's exactly right, right?

That's not to say these companies don't exist, but they're no longer at the top of their industry anymore, these old companies.

It's newer companies that maybe haven't even been around for a decade.

that maybe haven't even been around for a decade that are the biggest companies now.

And if you look at the tech industry, it's pretty obvious where that's happening, right?

I mean, you look at Facebook and Google and TikTok and all of those guys.

I mean, some of them are less than 10 years old, right?

Google's been around since the late 80s, early 90s.

Facebook, what, 2000s, right?

And they are the biggest companies in their industries, right?

So the other thing to keep in mind is some of the biggest and oldest companies have disappeared, all right?

Pan Am was one of the biggest airlines in the world, gone.

AIG, one of the biggest insurers in the world.

Arthur Anderson, top four consulting firm, right?

I mean, they just changed their name to Accenture, right, after they got caught crooking the books.

But anyway, Lehman Brothers, gone.

So what does this mean?

It means that they were unable to identify an effective strategy for long-term success and to implement it properly.

So they didn't last.

And strategy always is about thinking about long-term.

It's not purely thinking about tomorrow, all right?

How about family businesses?

Does anyone speak Spanish?

No?

Okay.

The father drives the mules, the son is a gentleman, the grandson a beggar.

Has anyone heard that saying before?

In Asia, in China, they will say three generations, same thing, right?

Three generations from poverty to poverty, right?

Are you the third generation?

Any of you here?

So think about how you make sure that that doesn't happen.

Because the data from some of the research shows that only 30% of family firms make it past the first generation, 13% past the second generation, and 3% past the third.

So a lot of pressure on some of you, right?

And by the way, I am available even after this class, if you want to come and talk about your strategy or your business, I'm around most of the time.

So if you want to chat, you're welcome, right?

I'm happy to help where I can.

So I wanted to highlight that because strategy is really about the long-term.

Can anyone name some of the oldest companies in Thailand?

Bgrim?

You know how old Bgrim is?

I think around 160 years old.

160, okay.

Any others?

SCB?

Okay, who's from SCB here?

Okay, do we have people from SCB?

Do we have anyone from K-Bank?

I thought, yeah, yes, you're from K-Bank.

K-Bank, SCB, no one from Bangkok Bank, right?

No, okay.

So some of the oldest companies, SCG, Bessins, Burly Jukka, Osotspa, Bgrim, 1878.

Yeah, 160 years about, right?

Impressive.

Now, what does this mean for us?

I mean, how old are the companies that you work for?

Anyone work for a company that's over 100 years old?

Which is, Citigroup?

CP Group, okay, yeah, CP Group.

Is it over 100?

Yeah, 150.

150, nice, okay.

So, is this how old companies get, right?

I mean, because this sounds pretty old, right?

Now, that's one standard to look at, but there are 5,500 companies in the world over 200 years old, right?

So how old do you think the oldest company is?

Around like a thousand years, maybe?

Around a thousand years?

Yeah.

No, your voice is loud, but use the mic for the recording.

No, I'm kidding, I'm kidding.

I'm kidding, I'm kidding.

Your voice is loud, but use the mic for the recording.

My apologies, sir.

I would say a thousand years.

Most of these are like Japanese ryokans, so they're Japanese hot spring hotels.

They've been running those since like, you know, the feudal ages, I think.

In fact, that's the oldest company in the world, but there are two.

Japan has a large percentage of some of the oldest companies in the world, right?

This one was a construction company that I think in mid-2000s merged with another company, so it no longer exists, but by the time it closed down, it was 1,400 years old.

You're talking about ryokans and onsens.

This one is 1,300 years old.

52nd generation currently running it, of the same family.

So doing something right, yeah?

So the question is, is that what you want, and how do you make sure that that happens?

Because when we talk about long-term strategy, we're not talking about what do you invest in tomorrow.

As a CEO, as a leader of a company, you are often making decisions which you will likely no longer be in the CEO role when those decisions actually bear fruit, right?

10, 20, 30 years hence, right?

There's a saying in Africa about, you know, the old men who plant trees under whose shade they will never rest, because by the time the tree has grown up, they're gone, right?

So those are the types of decisions I would like you to be thinking about, right?

These are the books.

This is your textbook.

This is the only book you really need to read, okay?

I've suggested The Seven Powers, Hamilton Helmer's book.

Small is Beautiful is about the false belief that growth is the only measure of success in strategy.

You don't have to constantly grow to do well.

And then there are, I don't know if you have access, probably through the library to HBR's library, there's some really good articles, including some of Michael Porter's stuff in the 10 must-reads on strategy, which you should be able to access through the library, right?

But the only book you really need to have to read is The Crafting and Executing Strategy, because there's a lot of stuff in there with cases and stuff that I don't really cover.

Okay, so how we will learn.

I want you guys to get to know each other, because you'll be working together, right?

Respect for each other, meaning usually when I get you to do group conversations and stuff, and when one group is presenting back, we all listen.

We don't have multiple conversations, yeah?

Because I think it helps to show respect for other people talking, so they show respect when you are talking, right?

Active participation.

And you don't really need to raise your hand, just switch on the mic and speak.

I'm very happy with that.

But if you feel more comfortable raising your hand, feel free, okay?

80% attendance is a requirement by Chula.

So in that context, you can really only miss one class, okay?

My policy for joining on Zoom officially is only with a medical certificate.

However, I know that you guys are all working and sometimes need to travel and do this and that, so I am, with this, with the EMBAs, I am far more flexible.

If you really need, you cannot be in class and you want to join via Zoom, just send me an email, send it to Student Experience as well, and always try and copy whatever emails you send to Geri Nijapa.

She's the course secretary who's set up the line group and everything, right?

So that we can keep track.

But I'm very happy if you cannot attend in person, that you can attend via Zoom, okay?

But I hope you will all be able to join in.

AI.

How many of you use AI to do your assignments?

How many of you plan to use AI to do your assignments?

Everyone, most of us, right?

Why not?

Why not?

That's what it's there for.

However, what I will say about AI, and the guys who do AI and digital will probably disagree with me, but AI, what it will give you is what already exists.

And if you are going to use, it's the same as using benchmarking of other companies, right?

To check where your company is.

You can compare yourself to other companies, you can do what they're doing.

All it will get you is to where they are.

It will not get you further.

In order to get further, you have to be creative.

So when you do your assignments, especially your individual assignment, what I'm looking for is, yes, you need to do the analysis according to the criteria of PESTEL and so on and so forth.

But what I want is for you to think as creatively and innovatively as possible for your company when you talk about its strategic recommendations.

Okay?

Now, innovatively but realistically, but think about what might you do based on what you've learned and based on what you've read and based on what you know that would help your company become the best in its industry and the most successful.

And in terms of AI, I don't know if I have the slide here, but if I feel that there is a little too much AI intervention in your assignment, I reserve the right to call you in for an interview about your assignment and I'll be asking you questions.

Okay?

So this is not about your grammar or anything, and I'm not that concerned about grammar, to be honest.

What I want is your ideas and your insight and your analysis.

Okay?

And finally, learn by doing.

Try these things out.

When you do your assignment, that's why I asked you to do the pre-work because I want you to think about what are the challenges that you're facing, right, in your business.

And when you do your assignment, I strongly encourage you to do the company that you're working with or own or is part of your family because that is where you can get more insight about the company because you're in the company, but also that you have some sort of ability to address and change.

Right?

You will have more power to do something with the company that you work with than, you know, oh, I'm really interested in Ferrari.

I'd like to do a strategy of Ferrari.

There have been many of those done already, right, and Ferrari does their own.

I want you guys to think about your company, even if it is a corporate, right, because you may have insights in your role that may not be present in what is currently happening and what the strategy of the organization is.

Okay?

So that's how we'll learn.

These are the weightings.

Class participation.

So class participation is divided into two.

One.

Five out of ten is based on the Google Doc that you guys linked into.

There will be a space every lecture for reflection.

Okay?

There are five questions that are asked in that spreadsheet.

You just need to answer one of them, very briefly.

The reflection will be open for that day that we have the class.

Right?

For the day that we have the class.

So by midnight, it'll close.

So at the end of the class, take a couple of minutes, write something down.

I just want to know what your thinking is.

Han, hello.

Welcome.

Where's your little card with your name?

It should be outside.

Oh, you got it with you?

No.

Ah, yes.

Grab that.

Okay.

So class participation.

Five is for the Google Doc.

Five is how I feel you have contributed in this class.

That's completely up to me, based on asking questions, sharing information.

Okay.

Ching Ching, if you can hear me, put yourself on mute.

Thank you.

Okay.

All right.

Okay, so class participation, my contribution, and five percent on your.

So every time you fill in that, you get, you know, you get half a percent, or whatever the equivalent is for six lectures.

Your individual assignment counts for 30 percent.

I expect you to put everything that you can think about and know into that assignment.

Because I spend time trying to understand what you are trying to say in that assignment for your company.

And I base my grading of that assignment on the experience that I've had with strategy, plus the 500 other assignments I've seen over the last few years, to see where you fit.

All right.

Group assignment is a slide deck that you will need to hand in the day before the presentations, and then the presentation itself.

Now, because I ask you, if you've read the syllabus, I ask you to do a strategic analysis and recommendations for SASEN as a place of learning, right?

And I've only done this last year and this year.

And I think it's a really great opportunity for you guys, because it's your first time here, you don't know much about the school, to go and find out a little bit about the school, and figure out, you know, where we sit.

And we've had some significant news recently.

We're now in the FT100 of global business schools.

In fact, executive education is also in that list, which is quite nice.

And so you need to think about what can we do to position ourselves in the way that we want to, which is, you know, global impact, but regional expertise or something like that, right?

So you need to look at what is our vision, what are we trying to achieve, and so on, and try and figure out how we can achieve it.

Last time, our director Ian came and sat in on those presentations.

I'll see if I can get him in this time as well.

Otherwise, maybe one of the other deputy directors, because they're interested in knowing what you guys think.

Okay, the online quizzes, those are the ones that we do, the Kahoot quizzes, right?

Just your attendance will count for the grade, okay?

And then there is also another document, one page, 300 words roughly, your personal reflection.

There are instructions for that that I'll give you in a bit as well.

You will submit that at the same time as your final individual assignment.

And I know you guys work really hard, so I think we finish on the 10th of July, and I'm giving you an extra two days to complete your individual assignment and your personal reflection, because I know you'll probably be working on your group presentations before, okay?

And there are, oh, there is actually only one class test.

I'm sorry, that's for the MBAs.

The class test will be on the, I think, lecture four.

Can't remember exactly when, but lecture four, we will have our class test, and it'll cover chapters one to four and whatever we do in the class, okay?

So now, this is your task now, is to form your assignment groups.

You have five minutes to form your assignment groups.

The main, there are two criteria.

There are about 60 of you, so the group should be between six and seven people, preferably.

Definitely not more than seven.

Definitely not less than five, okay?

If there are people missing from this class and you want to add them in, feel free to do that.

Make sure that your colleagues are in.

Your colleagues are in.

And the second one is to ensure that your group is as diverse as possible.

So, looking around you and seeing everyone that's exactly the same as you and saying, oh, this is my group, is also fine, as long as you can justify how diverse you are, okay?

Five minutes to set up your groups.

And you will then need to put them into SAS and WHERE.

I think they're just forming like this.

Make sure you take note of your groups.

Yeah, I have one more.

It's not not new.

Yeah, it's not.

Okay.

Yeah.

We have six.

One more.

One more.

Two more.

One more.

Not yet, right?

It goes public.

I mean, it'll probably hit like very soon, very soon, half a trillion dollars, whatever.

And SpaceX.

And yeah, SpaceX has just gone public, right?

That's another show.

Elon Musk is very good at playing shell games with companies, right?

But, you know, if it lists and it's worth a trillion dollars like Nvidia is now, right?

When will it show the value for that?

Because, to be honest with you, yes, some people say, oh, we've got to wait, long-term strategy, 10 years, 20 years.

But the market is not willing to wait.

So someone is going to be left holding the bag for those shares.

And I can tell you, it's not the hedge funds.

It's not the major investors.

It's the pension funds that we all belong to and our taxes that will be paying for that.

That's what I think.

But maybe I'm a pessimist.

Yeah, let me add on this one, because I'm working on a tech company, so I'm part of the AI part as well.

But I do personally believe that it's a cheat as well, actually.

What we just said is that it's true, because even Nvidia, there's a big company in the U.S.

called Corvive before.

They invest a lot in what we call computing processing power, right?

Because all the AI actually just rely on that, actually.

So the Corvive actually used to be the blockchain company, trying to just salvage the blockchain things.

But now they turn into the AI company.

They just buy the chip from Nvidia, and then Nvidia just buys the computing power back from Corvive as well.

That's what you said about circular economy.

That's what happened as well.

And that AI industry right now is what's holding the U.S.

market share.

Yeah.

And also the S&P 500 is still skyrocketing right now.

Skyrocketing because of these imaginary figures, right?

Yeah.

So I don't know if that answers your question, but yeah, I'm a bit pessimistic, I'll be honest with you.

But what success?

What is success, right?

Adapt.

You have to be adaptive.

If you think about Tencent as a company, you know what Tencent's main business is?

Like most revenue generating?

WeChat and?

Gaming.

Gaming is their biggest revenue generator.

Huge.

But I'll show you a little visual of Tencent in a moment.

They do everything, but the big chunk of it is in gaming.

And gaming is a bigger industry by revenue than movies, TV, and music put together.

Right?

It's huge.

In fact, there's a company in Thailand that started out as a gaming company and is now a huge e-commerce company.

Does anyone know who that is?

Shopee, right?

Shopee started by C, which is a gaming company.

And they tried to figure out, they created tokens for exchange within their gaming economy.

And then they thought, well, we've got this system, maybe we should use it to make some real money.

And they've pivoted really well on that, right?

So Tencent, value chain alignment.

Nike, right?

You need to know what you're doing from the time of design to the time of sale.

You have to have a single narrative and a very clear story for your value chain.

And the more control you have over your value chain, the better.

Now, Nike is not as good as some other companies.

Probably one of the best companies for value chain alignment is Zara.

And we'll talk about Zara later on in the class, right?

They manage their whole supply chain, which gives them huge advantages over other fast fashion companies like H&M because they don't need to order their clothes six months in advance from Bangladesh.

They can order it two weeks in advance and it'll be ready when something's coming up.

Because they have their own seamstresses, they have their own factories, they have everything that they need, right?

Market responsiveness.

You think about anyone in central group here?

We have someone in pink.

You work for central group, right?

What do you think about their strategy?

How much do you know about their strategy?

Because I work for CPN.

So I think the whole group, I might not get the biggest picture, but for the CPN ourselves, I think because we are retail focused, try and control the demand and integrate it with different uses.

The big thing that we're doing right now, we're doing hotels apart from Santara.

We're doing residential, doing offices.

And by doing that, it just makes the retail demand stronger.

So for CPN, it will be that.

But for central group, I think I can talk about CPN that relates to central group.

CPN Central Patana is focused on the development of the malls or the management of the malls?

It's development.

It's a real estate developer.

CPN is the development side, right?

Real estate side.

For me, central group, what was most interesting about central group, I think you're right, CP group as a whole is focusing on creating ecosystems of community malls, as well as their high-end malls, as well as all sorts of things.

In fact, there's someone else who works at CP from last year's group, Kate, who probably you can talk to and get some insight from.

Now, yes, but for me, the most interesting thing about central group was this idea that, you know, when they realized that they had, to a large extent, saturated the high-end luxury department store market in Thailand, and they had a lot of cash, they decided to expand.

And they didn't just expand in the region.

They went off to Europe, and they bought the most well-known department store brands in Rome, in Copenhagen, in Zurich, in all of these places.

And most of those people in those countries don't even know that these businesses are owned by a Thai company, right?

Because they manage them from a financial perspective in the same way as CP group, but in terms of marketing and retail, they allow them to do their own thing because they're successful anyway.

So they have a very responsive strategy.

They don't try and rubber-stamp every retail piece to be the same.

They're happy to let it be different.

So they're responsive to the market.

Ecosystem management, you know, for Apple, once you buy an Apple, you can barely get out of it, right?

I mean, I have an iPad and an iPhone and a MacBook and this and that.

I do have iCloud, but I don't really use it very much.

My Christmas present to myself in December was 48 terabytes of storage space at home.

And actually, it costs about 50% more now than it did when I bought it in December because of AI.

So look at Tencent's digital ecosystem.

Gaming, videos, work, help, reading, payments, listening, chatting, everything in a single system.

So actually, if you live in China, you don't ever need to leave your house or ever leave Tencent's environment.

You can do everything you want in there.

It can be your life.

Imagine how powerful that makes them in the lives of their customers, right?

And imagine how much data they are getting from their customers that they can use for other parts of their business, right?

You look at Apple.

What makes this a great strategy?

What makes Apple's strategy really great?

Shows up in the numbers, right?

So, Apple's in the black.

14% market share for smartphones.

That's a big chunk for one company, right?

But if you, I mean, Samsung is even bigger.

Xiaomi, which isn't even a quarter as old as Apple, is at 11%, okay?

So, okay, but not great.

Revenue share, 42%.

Right?

That's a big difference, right?

Operating profit share, 80%.

That's a strategy, right?

They sell the same thing as Samsung and Oppo and Vivo, but their business model has allowed them to create multiple times profitability than their competitors, which means they have what?

They have about $500 billion in cash just sitting around, which they can use to buy any technology they want or any new upcoming company or whatever it is, right?

And it's a crazy thing, right?

If you compare across those three charts, right?

So, in the book, it'll tell you that these are the things you need to look at, right, for a strategy.

You need to know how to strengthen your position with suppliers, etc.

You need to know how to design your product better and provide quality.

You need to be able to gain market share or increase profitability via lower costs.

You need to know which markets you're going to go into.

You need to know are there any emerging markets, are there any external threats?

We will cover all of these in bits and pieces as we go through.

You need to look at your CSR and corporate reputation.

You need to look at your corporate culture and your employment culture.

You need to look at your competitive strength in terms of alliances and joint ventures and so on, and we'll cover that later after the break as well.

Are you doing R&D?

How are you doing your functional skills, your HR, your sales, your production, etc.?

And finally, how safe are you in acquiring the resources that you need to produce your stuff, right?

So, if you are producing EV batteries for cars, right, how much access do you have to the child slaves in the Congo that dig it out of the ground, right?

You've got to think about how close are you to different parts of the value chain.

You'll find I'm quite sarcastic when it comes to profitability in some instances.

So, when strategy goes wrong, you all know what happened to BlackBerry, by the way.

It disappeared.

Why?

I mean, it had 20% market share of smartphones, and what, six years later, it was gone.

What happened, Sujin?

I remember watching the movie.

Ah, there was a movie.

Yes, but I think the whole movie, I think the CEO was pretty fixated on the keyboard.

The keyboard, right.

That kind of made them out of date, and people no longer favor the brand, I think.

Yes, and you know, it was a great product for its time.

They, at the time, and this is the thing that we need to think about, right?

Because when we look back, we think, oh, how stupid were they?

Why didn't they just move to touch key, right?

But there are reasons.

You listening to another lecture while you're in this lecture?

So, if you think about, you know, at the time, when they were thinking about should we move away from keyboards or not, right?

For them, that was a key factor that differentiated them, right?

To move away from it would mean changing who they were.

So, it's a difficult choice to make.

But it wasn't just the keyboard, because one of the things that kept them very strongly in business, especially with financial companies and so on, was the security of their system.

And because they owned all their servers, nobody else could access it.

It was a fully locked-in system.

So, very safe for company data and all sorts of stuff, right?

And emails and so on.

The problem was in about 2006, 2007, when Apple came out, they had several problems with their server system.

I was working in London at the time, and I think the system collapsed for several hours over two periods in a month, which obviously starts making people nervous, because if that's what you have the company for, is reliability and safety and security, and suddenly you can't use it, you know, there's a problem, right?

So, that caused a problem.

And also, because their ecosystem was locked, they didn't, unlike Apple, allow anyone else into that ecosystem to create apps or services or whatever.

It was all them.

And if you look at the difference between open source or publicly accessible content creation or technical creation and closed corporate technical creation, the open source will always do better.

And you compare that, I mean, if you think about corporate servers, what do they use?

They don't all, I mean, yes, some of them use Microsoft.

The bulk of them use Linux, right, which is open source.

There was a time in the early 2000s when Microsoft spent millions and millions of dollars trying to create a digital encyclopedia.

Does anyone remember the name of that encyclopedia?

It was called Encarta.

They hired hundreds of people, researchers and everything, to produce Encarta, which they then planned to sell as disks and where you could access online.

What happened?

Wikipedia, free!

People contributed their own personal time for free to fill this up, and it is as accurate as any privately held thing, and Encarta died.

It couldn't compete, right?

Before we go on to these two companies, should we take our break?

Because I know you have dinner waiting for you, right?

Okay, so half an hour and we're back here and we'll talk a little bit more about… Does anyone have any questions at this point before we take a break?

Are you okay with the speed we're going?

Okay, great.

I'll see you in the canteen on the fifth floor.

Is it fifth floor?

I like your style.

Thank you.

Thank you.

Thank you.

Thank you.

Thank you.

Thank you.

Did you register late for this course?

No.

No?

Because I didn't see your name in the first list.

Yes, I registered… I was admitted late.

Admitted late, okay.

I was wondering because I didn't recognize your name when you came in.

Because I learnt everyone's names.

Oh, really?

Yes.

But glad to have you.

Yeah.

Bye.

Bye.

Bye.

Good.

Good.

Bye.

Bye.

Bye.

Good morning, all.

Good morning.

Okay.

Bye bye.

Bye bye.

Bye.

Bye bye.

See you all.

Bye bye.

Bye bye.

Bye bye.

Bye bye.

See you all.

Bye bye.

Bye bye.

Bye bye.

Bye bye.

Bye bye.

Bye bye.

Bye bye.

Bye bye.

Bye bye.

Bye bye.

Bye bye.

Bye bye.

You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You You Oh It's fun You You You You You You You You You You You You You Oh You You You You You You You You You You You You You You You Travel Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign

Where do I see my digital picture?

Would I still have to go and get it printed?

Could I look at it on a computer?

Do you know what the computers in those days were like at home?

You remember what it looks like on the Matrix, green dots on a black background?

The quality of screens wasn't that great.

So I as an executive will say, that doesn't look like a photograph, that's awful.

And who in the family is going to get grandpa and grandma to come and sit in front of the computer to look at pictures?

So rationally, it made sense if you look backwards.

If you don't have the vision to think this will happen.

Netflix saw that, so when Netflix moved into streaming, and we'll talk a little bit about that tomorrow.

When Netflix moved into streaming, nobody else was doing it.

Why?

Because there wasn't enough bandwidth.

But Netflix saw with the growth of bandwidth over time, that very soon they would be able to send movies online.

So that's why they invested in it.

Nobody else did.

Once they started being successful, then Disney says, oh, we can do it.

Paramount says, oh, we can do it.

Everybody can do it.

But Netflix was the first because they saw the potential of broadband.

And we'll talk about that tomorrow when we look at what might happen in the future.

So this is what happened.

And in 2012, Kodak filed for bankruptcy.

And so poor strategy, which was a focus on film and paper.

But if you're interested in how this happens, and it happens more often than you think, you should read the book by Clayton Christensen about disruptive innovation.

He was a professor at Harvard.

He's the one who came up with the term disruptive innovation.

The book is called The Innovator's Dilemma.

And he, in two cases that took over 40 years of two different industries, including the computer storage industry, he showed that every time there is a significant shift in technology in an industry, the biggest players die and new players come up.

Because the biggest players will always focus on the strong end of what is traditional, because that's where their margins are.

That's where their profits are.

So it's only the small companies that are willing to be nimble enough to actually change and do something completely different.

And by the time the big companies come in to the game, the small companies have already become big, because they took over that market.

But that's just one aspect.

And this is from a company, everybody says, oh, America is so innovative, the West thinks so creatively.

But there is an example of a company in exactly the same situation and in exactly the same industry, that instead of going bankrupt like Kodak, in the year 2012 that Kodak filed for bankruptcy, they declared something like $20 billion plus in profits.

And they started in the same place.

They had 60% of the film market in Asia.

Fujifilm, right?

So does anyone know the story of Fujifilm?

Is it Polaroid?

No, Polaroid is Polaroid.

They created Instax after, but Polaroid was its own thing.

Polaroid also collapsed.

But here's a little video about Fujifilm.

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Selling food.

We are not technically in the food business, we're in the real estate business.

The only reason we sell 15 cent hamburgers is because they are the greatest producer of revenue from which our tenants can pay us our rent.

McDonald's is, I think, around the third largest land owner in the world because they own most of their locations.

Right?

And basically what they do is, yeah, you pay us a million dollars and we will allow you to set up one of our shops and we will supply you with everything.

All you have to do is keep paying us our fee every month.

Right?

Good deal on both sides.

But they make their money from the returns from their franchise holders.

Right?

They don't sell burgers.

The burgers are just the side, are just the tool that they use to get their tenants to give them revenue.

Right?

So, how does Toyota make money?

Well, now it feels like a trick question, right?

Sorry?

Oh, actually they sell cars.

Good, good guess though.

But they make 10% of their money from financing, actually.

They don't make a lot of money from their servicing unless they're out of the warranty, but they make a lot of them.

10% was not a small amount.

It's from financing because they realized that actually, you know, if the banks and sort of loan companies are making so much money, why can't they?

So they finance their own cars and they make quite a bit of cash.

How do cinemas make money?

Popcorn and drinks and stuff.

Right?

Now, so 788% profit, right?

Markup.

The question is why?

Why do cinemas not make money from their seats?

Anyone thought about that?

So everybody knows that cinemas make their money from this, right?

But why aren't they making money from their seats?

They don't share their revenue with the film company.

So for every film that is released, 80 to 90% of the seat revenue for the first three to four weeks goes directly to the studio.

That's how they make their money, right?

They make their money from the seats.

It is only if a movie stays for much, much longer, like three, if it's a really popular movie, then the cinemas can start making money because after three or four weeks, then the proportion that needs to get sent back to the studio gets less and less until they don't care because for them, it's about the first month or two of revenue from the cinemas, right?

And these days it's even shorter because most films go on to streaming quite quickly as well.

So they need to make their money quite quickly, right?

So there's a reason that cinemas need to find other sources of revenue than the seats because they don't make that much money from the seats.

How does Apple make money?

Selling computers or selling phones?

Intronuns.

Sorry?

I think from last year, Apple Care is one of the biggest products of Apple, Apple Care.

So services, Apple Care, 18% in total.

So the biggest chunk of their revenue is phones, right?

Phones, and they started off as a computer company, but their Macs make up less than 10% of their business now.

So they've shifted and they've changed as the world has changed, right?

I mean, these days an iPhone has more computing power than a MacBook from five years ago, even, right?

So you don't need a big machine to have the same sort of computing power.

How about Samsung?

Phone ingredients.

Sorry?

It's chipsets.

Chipsets.

So Samsung does make chipsets for a small amount, relatively small proportional to the market because Nvidia and others do the most.

Actually, it's not Nvidia that I'm thinking of.

Morris Chang.

Yes.

TSMC, that's it.

They're the ones that make 80% of the chips in the world, right?

So yeah, you're from Taiwan, right?

So there you go.

So yes, I mean, TSMC is another amazing company.

Amazing company.

They are so far ahead of their rivals, especially at the three to five nanometer chipset design, which is the most advanced, that it'll take between five to 10 years for people to catch up, right?

But Samsung, you can see.

So IT, mobile devices, so phones, a lot of them, is blue, which is about half their revenue.

The rest is semiconductors, consumer electronics, and panels, TV panels.

In fact, they supply iPhone with the glass for their screens, right?

I mean, it's Gorilla Glass and this and that, but Samsung manufactures.

And in fact, Samsung and Apple have a very interesting relationship.

You know, you see them as competitors, but they're not purely competitors.

They are in a relationship that is usually described as co-opetition.

They compete, but they co-operate because Apple licenses hundreds of pieces of technology and IP from Samsung.

And Samsung does the same from Apple for their phones, for each other's phones.

So Samsung owns a whole bunch of IP, Apple owns a whole bunch of IP, and they share that, and they license to each other, and they each make their own phones, right?

Samsung provides Apple with Glass, Apple provides, I don't know what it provides to Samsung, but they integrate in many ways as well as compete, right?

Anyone know what Samsung started as?

Soojin, you know.

A rice shop.

A rice shop, right?

Rice and dried fish, I think, right?

Yeah.

That was what, not even, that's 60 years ago?

Yeah.

Few generations ago, yeah?

Like CP, right?

CP started as what?

Seed shop.

Seed shop.

So there is hope for all of us, right?

There is hope for all of us.

So thinking strategically is about thinking for the long-term.

Does anyone recognize this place?

Changi Airport in Singapore.

Now, Changi Airport was built in the late 70s in the middle of an oil crisis, in the middle of an economic recession.

They decided, actually, they didn't decide, Lee Kuan Yew, against the advice of his cabinet and his McKinsey advisors, he had a choice between, we have an airport already, Paya Lebar, which is near town and we can land, and we need to expand it one new runway and we'll be fine for another 10, 15 years.

Or we can spend five to six times the money and go off to the other corner of the island, reclaim land from the ocean, which will also cost more money, and build a whole brand new airport.

Why do you think he did that?

Why do you think he did that?

Why do you think he chose to create a brand new, world-class international airport that had never been seen before in the 80s, rather than just extend their airport, which would have given them plenty more scope for the next 10 years?

Because they had a vision, he had a vision of creating a regional hub business.

It's a specialty in Southeast Asia, similar to how Hong Kong plays itself.

You want to do business in Asia, in Southeast Asia, that's mainland with Indonesia, you go to Singapore.

So you need to set up a business hub and the infrastructure surrounding it to match that goal in the future that you want to position yourself.

They wanted to be the hub, right?

They wanted to be the regional hub, which at that time was Hong Kong, right?

Singapore was nothing.

But almost 40% of trade had to pass through the Malacca Strait, which was very close to Singapore, right?

So there was a reason for people to come to Singapore if you gave them the choice and you gave them the resources.

So for him, he wasn't looking five, 10 years into the future, he was looking 40, 50 years into the future, right?

When he decided to create this airport.

So if you need to think strategically, right?

You need to have a systemic perspective.

To be a hub, you have to understand where you fit in the system, right?

You need to have an intention.

What is it that you're trying to achieve?

So you need a long-term vision, not just a goal.

A goal is a small thing.

A vision is how is the world going to be different because of what you're doing, right?

You need to think across time.

You need to have a hypothesis of what will work and what will not.

And sometimes you need to be intelligently opportunistic and take these chances when they come to you, right?

I think about, how many of you have heard of the company Niantic?

Why have you heard of Niantic?

I play Pokemon Go.

Play Pokemon Go, right?

Now, how did Niantic end up getting Pokemon Go from the Pokemon company?

Why were they chosen?

Well, because they had a game just before that that had created geotagged locations all over the world.

It was just ready and waiting to be used for something.

They had a game.

People would play.

My wife played it for a while.

It was okay, but it didn't get a huge amount of traction.

But building that game had given them the opportunity to create geotagging globally.

So when Pokemon was looking to release something that was about augmented reality and was about location and all of that stuff, there's a company that's ready.

Jump in, right?

Intelligently opportunistic.

So taking a systemic view is to understand that everything is related.

Some things very closely, some things through multiple levels, right?

So a systemic view requires you to look at interconnectedness, circularity, not linearity, circularity, if you create something and it has an impact, and that impact will affect what you create next, right?

So it's a circular process.

You've got to think of things in a circular way.

You've got to understand that sometimes there is emergence.

Emergence means that sometimes when you put a bunch of things together, something will happen that you did not expect.

Something new will come out of it, right?

I mean, if you think about, I mean, who would have thought when the internet was invented by Tim Berners-Lee, right?

In the 70s, that what would come out of it would be TikTok, right?

Who would have thought that?

Nobody, right?

You don't always see what can happen.

And that's why when we talk about the future, we don't always see what the future holds, right?

Because we base it on our current experience.

You need to look at the whole rather than the parts.

You need to look at both synthesis and analysis is about breaking things down to look at them individually.

Synthesis is about trying to understand the connections between all of them and how they fit together as a whole.

And you need to look at things in terms of relationships, right?

This is my favorite sort of quote for emergence.

There is nothing in a caterpillar that tells you it will become a butterfly, right?

You don't see that from the thing that it is, right?

Until it changes.

So look at interconnected feedback loops, look at causality and circular causality, and recognizing that seemingly separate elements are actually connected through networks of relationships and influence each other in often invisible ways.

So I want to show you a video, one of my favorite videos.

And it's got nothing to do with business, but what it has to do is with systems.

It is about the concept of trophic cascades.

And this story, it's about a five-minute video, is about how the introduction, the video is called How Wolves Change Rivers.

So think about this.

Can a wolf or even a pack of wolves, 30 wolves, let's say, do you think they can change how a river moves?

They're not beavers, right?

So how does that happen?

So this is how it happens.

One of the most exciting scientific findings of the past half century has been the discovery of widespread trophic cascades.

A trophic cascade is an ecological process which starts at the top of the food chain and tumbles all the way down to the bottom.

And the classic example is what happened in the Yellowstone National Park in the United States when wolves were reintroduced in 1915.

Wolves were reintroduced in 1995.

Now, we all know that wolves kill various species of animals, but perhaps we're slightly less aware that they give life to many others.

Before the wolves turned up, they'd been absent for 70 years, but the numbers of deer, because there was nothing to hunt them, had built up and built up in the Yellowstone Park.

And despite efforts by humans to control them, it managed to reduce much of the vegetation there to almost nothing.

They'd just grazed it away.

But as soon as the wolves arrived, even though they were few in number, they started to have the most remarkable effects.

First, of course, they killed some of the deer, but that wasn't the major thing.

Much more significantly, they radically changed the behaviour of the deer.

The deer started avoiding certain parts of the park, the places where they could be trapped most easily, particularly the valleys and the gorges.

And immediately, those places started to regenerate.

In some areas, the height of the trees quintupled in just six years.

Bare valley sides quickly became forests of aspen and willow and cottonwood.

And as soon as that happened, the birds started moving in.

The number of songbirds and migratory birds started to increase greatly.

The number of beavers started to increase because beavers like to eat the trees.

And beavers, like wolves, are ecosystem engineers.

They create niches for other species.

And the dams they built in the rivers provided habitats for otters and muskrats and ducks and fish and reptiles and amphibians.

The wolves killed coyotes.

And as a result of that, the number of rabbits and mice began to rise, which meant more hawks, more weasels, more foxes, more badgers.

Ravens and bald eagles came down to feed on the carrion that the wolves had left.

Bears fed on it too, and their population began to rise as well, partly also because there were more berries growing on the regenerating shrubs.

And the bears reinforced the impact of the wolves by killing some of the calves of the deer.

But here's where it gets really interesting.

The wolves changed the behaviour of the rivers.

They began to meander less.

There was less erosion.

The channels narrowed, more pools formed, more riffle sections, all of which were great for wildlife habitats.

The rivers changed in response to the wolves.

And the reason was that the regenerating forests stabilised the banks so that they collapsed less often, so that the rivers became more fixed in their course.

Similarly, by driving the deer out of some places and the vegetation recovering on the valley sides, there was less soil erosion because the vegetation stabilised that as well.

So the wolves, small in number, transformed not just the ecosystem of the Yellowstone National Park, this huge area of land, but also its physical geography.

What do you think?

Interesting?

Systems, right?

Everything is connected.

Now, that's the environment, but even in the business.

In business and economy, things are even more closely connected.

So, for example, if you look at the world today, there's a lot of technology, and there's a lot of innovation, and there's a lot of innovation, and there's a lot of innovation, and there's a lot of innovation, and there's a lot of innovation, but in business and economy, things are even more closely connected because we're all living in this economy, right?

If you look at Toyota, right?

In 2011, there was an earthquake and a tsunami, right?

And what happened?

In one area, I think in northeastern Japan, there were several suppliers, including one called Renesas Electronic Components and some other paint and chemical companies.

So just being in one place caused a huge chunk of their supplier base to stop being able to supply them.

But even worse, they found out that the microcontrollers that came from Renesas didn't just affect one or two parts, they affected 150 parts.

So they were a second-tier supplier to some of Toyota's first-tier suppliers, who then could no longer produce and provide them with their parts because suddenly they couldn't get the microcontrollers, right?

They found many suppliers clustered in northeastern Japan, so they were simultaneously affected.

Different tier-one suppliers were using the same tier-two suppliers for critical components, and low inventory levels magnified the impact of supply disruption.

So what did they do after that?

They started after that to track 300,000-plus parts all the way to tier-four levels so they could tell where everything was and what the vulnerabilities were.

They standardized designs across models to increase flexibility, so you didn't need to use a different sort of steering wheel for a Hilux versus a Camry or whatever.

Required tier-one suppliers to develop regional backup manufacturing and increased inventory of critical components with limited sources.

That has improved their resilience.

But even then, when the floods happened in Thailand, which was about the same time, they had serious problems because Thailand provides a lot of the electrical and manufacturing parts of Toyota, right?

Whereas Japan provided a lot of the electronics, and so neither part was able to supply each other.

They went about nine months behind on their delivery schedule from floods and earthquakes.

So you see how all of these things are so closely interconnected.

If you look at Apple, what happens when you get into an Apple ecosystem?

You start off by your first device.

Within six to 12 months, your second device.

Third Apple device, also relatively quickly.

Then you get your family in.

So they expect $6,000 to $7,000 in three to four years from each person that comes into their market, not just a $1,000 phone, right?

It's like it sucks you in, right?

Now, it's a nice place to be because everything works, but it's very difficult to get out, right?

So these are all the different things that you could get off Apple, and most people get probably all of them.

But I just wanted to highlight something about causal factors that aren't always obvious, right?

This research comes from a book by an economist called Freakonomics.

Steve, I can't remember his name now.

Anyway, so he came up with this theory, and there have been a lot of controversies about this, but I listened to a podcast by him last year, and he stands by his research.

So look at this chart, right?

You have murder rate and robbery rate, so the main two types of crimes, right?

Murder and robbery.

In the 80s, there was like a peak, and then the baby boomers passed their criminal age.

Then in the 85, crack market becomes big.

1991, peak murder rate.

But from 1993-94, both the murder and the robbery rate started going down for 15 years and kept going down for a while longer after that.

Why do you think that happened?

Why do you think crime started going down in the US from about 1994?

Because the economy was doing well, so people, like young generation, don't go to the crack market, and everybody got a job.

Great point.

However, 2008-2009, huge financial crisis.

Everybody lost their jobs.

Crime still kept going down.

Birth rate, meaning what?

Use the mic.

A decrease in birth rate, so less young people and the older generation have more money to support themselves instead of going to the younger.

So birth rate, perhaps.

So people are having less kids.

Any other ideas?

Legalization of certain drugs, such as cannabis, in some states.

This was way before that.

So this was legalized in the mid-2010s, right?

In the US.

This is from the 90s, right, where it was still illegal.

Immigrants.

Immigrants.

So more immigrants or less immigrants?

More.

More immigrants, less crime.

Trump would disagree with you.

So his argument is the reason crime started going down in the mid-90s was because of a decision, a Supreme Court decision that was made in 1972.

You know what that was Roe versus Wade?

Yeah.

Abortion?

Legalized abortion, right?

So how does legalized abortion in 1973 lead to crime going down from 1994?

Crime might, this is just a theory, crime might have been concentrated on a specific demographic sector and prior to more safe and accessible abortion some of the targeted demographics may have been producing more potential criminals in the future.

So once abortion is available and accessible and legal, crime rates may have dropped because of population control.

So that's a very good, that's a very good theory, which is exactly what he said.

He said the ability to have an abortion affected a lot of people who were in situations where they didn't want to have children and couldn't bring them up properly.

So in areas, in high poverty areas, crime-stricken areas, when they finally had a choice to not have that child, then that child wasn't born.

So actually there was a preponderance of pregnancy terminations, abortions that happened in the poorest areas because they now had access to it.

And so it was those babies that weren't born and by the time they hit 18 there were far fewer of them and so it started going down.

So we don't always see how these things connect.

You may agree with this particular theory or not, he will stand by it, Stephen Levitt is his name.

But the point is that sometimes we cannot always make the connections unless we really start digging deep.

So in order to test a strategy, in order to evaluate whether it's being successful or not, there are three criteria.

The fit test, is it a good fit with what you are capable of in your company and with the external context.

So if you look at Toyota, they have probably one of the best manufacturing processes and not just machinery wise but people wise.

They have that red cord that anyone can pull and stop the whole manufacturing line, which means that could cost them millions but it saves them a huge amount and shows a lot of trust in their staff to do the right thing.

So they have that built in, so of course they fit in with what they're doing in terms of their internal capabilities.

Is your strategy competitive?

Is it likely to result in sustainable competitive advantage?

So Apple, yes sure, because they've got ecosystem locked in, they've got brand loyalty, they've got design technology integration, and they've got scale advantages now that they make their own chips, the M1 to the M4 now.

They don't need to depend on anyone else to design their chips and make them.

And finally the performance test.

Are you more profitable and financially competitive than your competitors?

That's basically it, right?

So those three things.

So if you look at Nvidia, I mean, what's their revenue at the moment?

Probably one of the highest in the world, right?

So these are the things that you can use to test whether your strategy is effective and successful or not.

So that's really all I wanted to talk to you about today with regard to what is strategy.

Tomorrow we will start talking in a little bit more detail about purpose and vision and what that means for you, right?

I wanted to keep a few minutes to talk about assignments and so on, in case you have any questions, because often there's some questions that people have.

So I just wanted to put aside some time for that.

But before I go to that, does anyone have any questions or any thoughts about this so far?

Yes, Tai.

I have a question.

How do we separate between winning strategy and luck?

Because at the end of the performance, lucky still wins sometimes, right?

Sure, lucky still wins.

But what I would say about luck is that the more prepared you are, the luckier you become.

You know, there's another old saying about the reason most people don't grab opportunities when they show up is because they usually show up knocking on your door dressed in overalls looking like work, right?

Because sometimes what you see as an opportunity requires effort, right?

Even if you're lucky at spotting it, you need to do something about it.

So, I mean, we all have so many ideas that could be million-dollar, billion-dollar ideas.

How many of us actually translate that into something real, right?

And by the time we decide we're going to do something two years down the line, you say, oh, someone else has done that idea.

That was my idea.

They took it and they made money out of it, right?

So, yes, there is such a thing as luck, but a lot of luck is about being prepared to see the opportunities and take advantage of them, right?

It's no use to be offered a great opportunity if you're not prepared for it, yeah?

Does that answer your question?

Anything else?

Sorry, how to test the timing with the right time to use the winning strategy or any strategies?

So, about how do you time your entry into a market or into a product or whatever, right?

That's a great question and the answer is, as always, it depends.

But what I would say is that you can evaluate.

So, for example, if you were in telecoms, right, and you want to...

there's a country which doesn't have a mobile phone system or anything and you want to go in there, right?

You want to be the first player.

The question you have to ask is, do you have the resources to install the infrastructure required?

Because if you don't, then you have to wait for someone else to do it, so you can piggyback off it.

So, do you have the resources to initiate an industry?

And on top of that, do you have the resources to protect that industry for long enough for you to become profitable?

You know, so there's...

and I think I may mention this again later, but in Indonesia, in the early 90s, Nestle decided to make, to introduce, because there were kids who were not nourished enough and whatever, they decided to make vitamin-embedded biscuits, right?

Like those, like the milk sweets that you get, right?

Something like that.

Vitamin-embedded and have all the minerals and things that you need in a biscuit, right?

They spent millions of dollars preparing the right formula, building the factory, producing it, and so on, and it was a good product.

But within three months of them entering the market, four Chinese companies had come in and copied it exactly and are charging half the price.

So, was that investment good or not, right?

Because they couldn't protect that market.

Their pricing was too high and other people could easily engineer what they were...

if they said they had all of this in their product, then other companies could do it, right?

So, if you want to go in first, you have to be able to protect your space, right?

If you want to go in as a fast second, then that's a different set of questions.

Otherwise, you just wait until the market is mature and you go in and take a small piece of it, you know?

So, there's multiple things that you need to think about.

Does that answer your question?

Okay, anything else?

Yes?

Because you talk about you want to be the first or you want to be the best, so when you decide that, do you think that's partly because of like your personality or this is something like you can develop?

It's like, I want to be the first one in the market, or you can be like a late developer and be the best one in the market.

So, you can be the first and best, that's also possible, right?

You may have a product that's amazing that nobody else has and you're the first and the best in the market and nobody else can copy you.

It's not personality, it's economics, right?

Basically, you need to choose whether you are the sort of company that is able to innovate and adapt in time and take advantage of these situations as they come up, or if you do not have that sort of R&D capability or that sort of market research capability, then you have to wait for someone else and jump in when you think it looks right, right?

Most people are fast followers.

Very few people will start the industry.

That's just life, yeah?

Yes, Sue?

So, you're mentioning about the intelligently opportunity?

Yeah, intelligently opportunistic, yeah.

So, that is like, can you help elaborate more?

So, that's something you have to be, or you have to build it, acquire it, or something you have to be preparing of?

So, what I mean by intelligently opportunistic is that you have to be prepared in your industry as much as possible, so that when the opportunities do arise, you have the capability and the resources to take advantage of it, right?

And also that you are capable of scanning the environment well enough that you can spot those opportunities.

Most companies don't spot opportunities because they're so internally focused, especially big companies.

They are so internally focused that they don't think about what's happening outside, they think about their own processes and about cutting costs and streamlining and efficiency, not necessarily about effectiveness as a business.

So, the two things you need to be intelligently opportunistic is observant and prepared, yeah?

Okay, so, yes, Gi, sorry.

I have a question because one that you discussed, right, is about the strategy is aimed for the long term, and some of them, what we did today, when it's due to result that we want, it's very sometime in the future.

But how do we have a framework to determine whether at this time, do I need to reconsider my strategy already, or I also need to pretend to keep going on, waiting until it's due to result?

What is the indicator or the frame?

I understood that it may be dependent also, like you mentioned, many factors, many perspectives of view, but how?

There is a very, very simple framework, and it's called SWOT.

If you do SWOT properly, you will analyze what your real strengths are, you want me to try again?

You will figure out what your gaps are, but more importantly, you are also not just looking internally, you're also looking externally as what are the threats and opportunities, and you need to match your own strengths to the opportunities that are outside, and your own weaknesses you need to build against the potential threats.

So, SWOT is done, again, as an integrated whole.

It's not just strengths and weaknesses and opportunities.

They all need to fit together when you look at it, and if you do your SWOT properly, you will then see, is my strategy working?

Do I have the right strengths to address these opportunities?

Then my strategy is working, right?

Or am I weak in certain areas that may cause me problems later on?

Then I need to change my strategy to adjust for that weakness, right?

And so, you can tell from your SWOT, are you going in the right direction with your strategy, or do you need to adjust and change it?

And we'll cover that probably in two weeks.

But keep that in mind when we do the SWOT.

That's a great question.

Okay, anything else?

This is a very quiet class.

Hopefully, you'll make a bit more noise tomorrow.

Let's see.

So, homework and assignments.

So, chapter one and two.

You don't have to read it by tomorrow.

Don't worry too much.

Oh, there was a question.

I had actually allocated two class tests for EMBA, but you only have six lectures, right?

Are you okay with only doing one that counts for 20 percent?

Look, I'm okay to do it either way, and if I do it 10-10, I would do it in lecture 5 and lecture 7, right?

And it would be a probably a 15-minute test with 10 multiple choice questions, something like that.

So, I'm happy to split it in two or do it in one.

What's the vote?

How many say one?

Okay, not the majority.

How many say two?

Slight minority.

Okay, so, I don't know.

I mean, can you guys come back to me in the next couple of days as to what you want to do?

Who's your class president?

Who's your class rep?

Ah, oh, it's Zhu Wang, not Zhong.

Zhu Wang, okay.

Yeah, he's gonna decide our siting.

So, will you send me a line?

I'm on your line group.

You can get my name from there and send me a note.

If you can send it to me by Monday or Tuesday, that'll be great.

Can I leave it to you to decide, or do you want to decide now?

Now, now.

Now, now.

Okay, so, okay, so, raise your hands again for one.

One, one test only.

Okay, I'd say that's a significant majority, right?

Okay, so, one test.

It'll be in lecture five.

Okay, so, that gives you time.

Okay, I think Jerry will, Jerry is listening.

She'll keep that in mind and she'll remind.

Okay, it's not going to be a horrible, it'll be multiple choice.

I'm not going to make it difficult for you, but I will make you think.

Okay, all right, Juan.

I just said that we have got one test, but on lecture five, not lecture seven.

Sorry?

So, we have one test.

Yes, at lecture five, yes.

So, I won't count everything that happens after that, so it's less that you have to study.

Okay.

The reason I won't do it at seven if it's only one is because that gives you more time to prepare for your group assignment and presentation.

So, I try and put it in the middle.

Is that okay?

Okay.

All right, and then, individual assignment.

I need you to do an analysis based on the tools that we're going to cover.

They're all in the book.

You can read in advance.

If you have already identified your company in your pre-work index card that you sent me, and thank you, most of you, for measuring correctly what A6 is, because the MBAs don't seem to know, but it seems like some of you don't know the difference between card and paper.

That's another thing entirely, but what I want you to do is, if you have identified the company in the card and you're not going to change that, that's fine, but I really want you to choose a company that you're involved with, right?

So, if you've suddenly had, once you've had this class, you think, oh, I should be doing my family business, I want to change from, you know, some of you, if you're in a consulting firm or a big bank, and you want to, I'm fine with that, but you just need to send me an email, copy the course secretary, and I will approve, and fine.

You need to do that before next Friday, right, to tell me your company.

If the company is already in your card, you don't need to do anything.

If you want to change the company, you need to send me an email by Friday, okay?

All right, so yes, and max 10 pages.

I used to give 20 pages, and people just write rubbish, and I don't need to read rubbish.

10 pages, two and a half thousand to three thousand words, at most, right?

In fact, I think I give some criteria for that, but 10 pages at most, not counting index for your AI usage and references and everything like that, 10 pages of content, right?

And yeah, you need to articulate where your company is, what's the external environment, what are your internal capabilities, and what's your strategic position, and what I really want is for you to give me some creative strategic recommendations for your company to take it to the next level.

That's what I want you to think about.

If you run a bakery, what are you going to do over the next five years to ten years to make it the best bakery in town, or the most desirable, like, cookies, or whatever it is?

Doesn't matter.

What are you going to do?

How are you going to differentiate your company for the long term, yeah?

Okay, so you don't have to do all of this right now, because we'll be covering a lot of this as we go along, right?

But if you're reading in advance, and if you have any questions, please feel free to send me an email or come and see me.

I'm usually, actually these days when I'm not teaching, I'm usually at home because I'm preparing, but most of the time I'm in my office on the fourth floor in the afternoons.

Okay, you all know where my, do all of you know where my office is?

Probably don't, because you're new here, right?

You know the little lift behind TK Hall, the little yellow lift, the single lift behind the curtain.

So actually, so if you walk into TK Hall, right, TK Hall is the ground floor where you have the sofas and the screens and everything, and the little bleachers seats, right?

If you go through there to our Sassin Museum, you know there's a museum there.

Anyway, there's a museum there too.

It's not very big, but it's there.

Right next to it there's a little lift, not the three lifts that you have here, or the parking lifts.

Other side of the building, there's a single lift there, and if you go up to the fourth floor on that lift, you will find my office right on the left in Executive Education.

Okay, so that's the individual assignment.

You see I've given you a deadline for Sunday the 12th, so you have a little bit of time.

You need to submit it on Sassinware.

Use of AI, please tell me what you're doing, and don't use it in an undisclosed way.

I don't mind you using it, but I will ask to talk to you if I am not sure how much of it is your work and how much of it is AI's, right?

I'm hoping I don't have to interview 60 people.

Okay, so this is the rubric.

You'll get these slides immediately afterwards.

Then you also have a personal learning reflection.

So what were your most significant insights from the course?

How is your understanding of strategy change, etc., etc.?

That's a one page that I need you to submit, and most people will get 10 out of 10 for this if they have any sort of general thoughts about this course, right?

I just want you to think about what you learned, and because reflecting on it should help you, right?

Group assignment.

Develop a comprehensive strategic transformation plan to position Sassin as Southeast Asia's premier business school using collaborative consulting approach, which is go and talk to a few people, find out what you can about Sassin, and I know this is your first few days here, so this is a good chance to get to know the know the school.

You can look online, you can use AI to find out information.

I've also said to the other classes, sometimes they want to go and interview the director, and usually if they're available, they'll give you time.

What I recommend if you're going to see any of the senior management is try and set up a time when representatives from all the groups can go together, so he doesn't have to make six appointments, or 10 appointments, right?

How many groups do we have, by the way?

Nine.

Okay, great.

Yeah, I'm expecting, yeah, with 60 people about eight or nine groups.

Perfect.

Yeah, so see if you can, if you want to make appointments, talk to people, and I'm hoping to get him to come and sit in on your presentations as well, because he also learns from them, okay?

All right, so all of that's there.

That's it.

Well, three minutes left.

So, how are you finding the pace of this course, okay?

Interesting?

Yeah?

Okay, great.

So, I'll keep doing that.

If you have any problems, come and tell me, and we will make some adjustments, okay?

All right, guys, thank you very much.

Have a great evening, and I'll see you again tomorrow afternoon.

Excited!

Take care.

you you you