A conversation with Prof Mike Rosenberg, Strategic Management Professor, IESE Business School

“If you (the company) can continue to do your business and keep your doors open, while others are struggling, you know, this is clearly a competitive advantage. If you can show the world that you’re doing it responsibly, ethically, and in a safe way, even better, customers will respond better and more important than anything, employees will respond too.”

Prof Mike Rosenberg, IESE Business School

Resilient supply chains, local leadership adaptability and good crisis management has helped companies like Schneider Electric and Hapag Lloyd deal with the impact of the coronavirus, according to Prof Mike Rosenberg

DocHQ is a health tech business that offers a range of digital health solutions for companies with the aim of improving employee health and productivity and also caters to individual health needs. Our mission is to provide patient-centred healthcare with scalable and secure technologies to enable better health outcomes for everyone.

We are launching a new podcast series called ‘Health Tech For Businesses’ where we will be exploring topics affecting healthcare like AI, Data privacy, health equity and digital health solutions for businesses.

Since businesses across the world are facing very bleak scenarios given the current crisis and CEOs are thinking how they can resume their businesses safely, we would like to use our podcasts to answer these questions and more. And hence, we will be running a mini-COVID series for the next few weeks to discuss how businesses can cope in this pandemic.

In this episode of Health Tech for Businesses, we share a conversation with Prof Mike Rosenberg, Strategic Management Professor at IESE Business School, Barcelona. Mike has moderated over 23 webinars solely on COVID-19 and its impact on key industries. Here he shares his take with DocHQ’s Marketing and Operations Lead, Gopika Sampat, on the different methodologies adopted by businesses and how companies can adapt their organizational structure, supply chains and more to handle the crisis. Mike also publishes a weekly blog called ‘Doing Business on the Earth’ which explores the interaction between issues of strategy, globalization, geopolitics, and environmental sustainability in a business context. To learn more about his blog, visit https://blog.iese.edu/doing-business/about-doing-business-on-the-earth/

You can also watch Mike’s COVID-19 webinars on https://blog.iese.edu/rosenberg/sars-cov-2/

An edited transcript of the podcast follows. For more such conversations, subscribe to the series on Apple Podcasts or Spotify.

Podcast transcript

Gopika Sampat: Hello to everyone from DocHQ. I am Gopika, and welcome to our podcast, ‘Health Tech For Businesses’. Today, we will launch our mini-COVID series with a discussion with none other than Professor Mike Rosenberg from IESE Business School in Barcelona. Mike is a professor in the Strategic Management department at IESE. He lectures in both the MBA and the Executive Education programs, where he teaches strategy, geopolitics and sustainability. He’s written books on these topics, and also publishes a weekly blog called ‘Doing Business On Earth’. He has extensive experience in strategy and management consulting in the automotive sector. I thought it would be particularly interesting to have him here, because he has done not one or two, but 23 webinars on the coronavirus pandemic. Our discussion today will revolve around his take on the key learnings from these webinars. We are indeed very happy to have him here. So without further ado, let me welcome Professor Mike Rosenberg. Hello, Mike, how are you doing today?

Mike Rosenberg :  I’m fantastic, Gopika. Thanks for having me on the program.

Gopika Sampat : You have seen the evolution of the crisis over all your webinars. There’s constantly new information about the pandemic, there could potentially be a second outbreak. So how do you see the situation evolving? Where do you think this is headed?

Mike Rosenberg  : Thanks, Gopika. It’s really challenging times, even from the information overload that most of us are experiencing. There is so much data out there and there are so many opinions out there. I don’t know if you had this experience that you’re speaking with your friends, you’re speaking with your relatives, and everybody has an opinion about just about everything. And they’re getting their information from everywhere. And I think one of the things which I recommend to people is to pick the sources of data that you trust and stick to them. I get data from the Johns Hopkins Observatory, which gives us the numbers. I look at the WHO, I look at the local health authorities. And I read the New York Times because I kind of like the New York Times. But I basically don’t look at anything on the internet ever, except the New York Times Online. And then whether you read the New York Times, The Wall Street Journal or the Guardian, the point is, there are organizations in the world which have proper editorial control, which try to do their best to tell the truth, which try to do their best to check the facts of things. And I think it’s important, especially for leadership, people in leadership positions, to be able to tell their people, things which are more or less true, or at least have been checked. And not to kind of respond to the latest post on some websites or something. And certainly never to get your news from Facebook. I think that’s absolutely clear that that’s the wrong place to get news. Now, given that, where are we? And I think it depends on where you are in the world, because different countries have what they call it the Kennedy School of Government, different degrees of policy space, meaning what can they actually do and the ability of a country to react to this virus or to other emergencies have to do with the money they have. So rich countries can do more than poor countries, clearly. Very poor countries cannot lock down their population because they simply don’t have the people, don’t have the money, the government doesn’t have the money, it’s just not possible. The institutions and the strength of those institutions, even the philosophy of government matters. So for example, China and some other authoritarian countries like Singapore, can take steps which in a liberal democracy, you simply cannot do. For the quarantine in Hong Kong, you’re given a bracelet which tracks where you are, and you sit in your house, because if you leave your house, the bracelet will tell the police that you’re out of your house. We can’t do that everywhere. So there’s a philosophical issue. And then finally, there’s a leadership issue, which is, even if you have the right institutions, even if you have the money, even if you have the best medical technology available, as shown in the United States, if you don’t have the proper leadership, the place can be a total disaster. So you put those things together and you create a very different environment in different countries. And frankly, we consider ourselves somewhat blessed, because here in Spain, while it is not the richest country in the world, it does have a public health care system, and even though the government is kind of squabbling with each other and doing different territorial disputes, it is competent. It is capable. And I think it has shown that it can demonstrate the real leadership in times of crisis. And then the last point is where we are with the whole kind of health approach. And this has to do with testing, the ability to trace, to find people and trace where they’ve been, vaccines etc. And finally, the ability to treat this disease for a relatively small percentage of people who get it, who actually need doctor’s treatment, or in a worst case, intensive care unit and serious, serious treatment because they get it really badly. And in that whole space, I think there’s a lot of information and a lot of activity going on the vaccine side, which I understand why it’s so important, I understand why they’re doing it. I think testing is perhaps even more important. With testing there’s a lot of stuff going on. I think, September, I’ve been told that there will be commercially available tests in the UK, at the local drugstore. And the more and more people get tested. And the more and more protocols there exists for tracing those people who don’t have the antibodies, who do have the antibodies, who have the symptoms – so the more we do there, and the more we do on the treatment side, for the people who do become critically ill, then perhaps we can avoid some of the dangers that are inherent with any kind of program to vaccinate the full population. Now, this is complicated, and part of the complication is none of us are virologists. None of us are epidemiologists. So we have to base our facts on something and kind of live with the situation we have. So it’s very different in different places. And right now, in most of central Europe and most of Eastern Western Europe, the prevalence, the number of people that actually have the disease is very, very low, which means the statistical probability that anybody gets it in a given day is relatively low. That doesn’t mean that there are no outbreaks and there has been an outbreak here in Catalonia. But generally speaking in certain countries, the situation is very stable, while in other parts of the world like in Texas and Florida and some other places in the United States, at this moment in time totally out of control.

Gopika Sampat: So like you said, different countries are adopting different approaches. But now let’s just take a step back and look at companies and different industries. You had an interesting discussion with Emmanuel Lagarrigue from Schneider Electric. So from what I understood, they were focusing more on regional supply chains and, you know, a matrix organizational structure and several other measures. So what is your opinion on how they handled the crisis? And what do you think this crisis means for energy companies overall and where do you see it going ahead in the future?

Mike Rosenberg : So Emmanuel Lagarrigue is the Chief Innovation Officer of Schneider, before that he was the Chief Strategy Officer. He lives with his family in Hong Kong because the CEO of the company, Jean-Pascal Tricoire, some years ago moved headquarters from Paris to Hong Kong, to kind of indicate that Schneider is a global company, which I think is, is very telling, and they did fairly well during the crisis for a couple of reasons. One is, they are in the energy management business and automation business and demand for their products has remained fairly constant. There has been a dip in demand during confinement, but even as people come out of confinement, they want to fix up their home offices. And they want to invest more money in their houses and, and companies want to invest more money in automation because robots don’t get sick, etc. So their demand has been solid. But what has really helped them get through the crisis is two things. One is in the supply chain area. They are in the first place, regional, because if you think about electrical components, every country has its own laws and its own regulations. So they’ve had to have local supply. But it’s also redundant. They have two suppliers for everything they sell. Everything they make, every component they buy, they have a policy in place of always having two suppliers in different places. So when Mexico was locked down, they could source from the Philippines. When China went out, they had other sources of supply for the regional business in Asia. So that has helped them quite a lot by having a very resilient supply chain, and having built in that resilience years ago, and accepting a cost trade-off for that resilience. So many companies around the world have built these really complicated and very cost-effective global supply chains. But if anything happens to disrupt the supply, they are in trouble. So these guys had the resilience and duplication in the supply chain which helped them. The other thing that they did, which or they had and which they were able to do was that Schneider has country managers for every major country they do business in. And they’ve kept those country managers in place. The flavor of the month or the style in many companies is to have global businesses with global business heads, and broad regional directors who are charged with Asia Pacific or Europe, and to take the role of the country manager, the head of Spain or the head of Indonesia or the head of Kenya out, because you don’t need them. You can have a head of Africa. But let’s face it, Africa is 54 different countries. Schneider made the choice to keep those people in place. And then Jean-Pascal Tricoire, the CEO, made the leadership decision to put them in charge of the company’s response to the virus and to give them complete decision control as to how to keep their people safe, how to keep the business open, and how to run through the day to day. That combination of the right structure and the right leadership, I think, is what really helped them. And again, I don’t want to beat up Donald Trump too badly, although he deserves everything he gets. But you know, his leadership has been first to not provide governmental leadership from the federal government, to give the problem deliberately to the governors of the country, but then to undermine them in the eyes of the people. And the point is if you give local leadership and you should in a crisis like this, you have to empower the local leaders, support them, defend them, and respect their decisions. So this is really what I think Schneider has done very, very well. This combination of resilient supply chain, and local leadership in times of crisis.

Gopika Sampat: Speaking of supply chains, the distressed supply chains and the disruption in different channels – this has been a major impact even on the shipping and logistics industry. You had an interesting conversation with Rolf Habben Jansen, who is the CEO of Hapag Lloyd. And I noticed that in that webinar, he explained that one of the major measures the company implemented, was having extra containers ready. Could you throw some light on how they handled this crisis overall? And again, what do you think is the path ahead for logistics, and shipping in this in this situation?

Mike Rosenberg : The Hapag Lloyd story is a great story about how every industry is a little bit different. But the fundamental ideas are somewhat common. This is the third biggest container shipping company in the world. They have 250 ships. They manage 12 million boxes and containers in all these different ships and all the ports. As they saw the crisis coming first, a couple of ports in China were closed, and people were close to the ports. And then there was a couple of ships those cruise ships in particular, where lots of people had the virus. Now what do you do and they saw early on, that there may be a problem with having enough containers available where they need them. Because these 12 million containers are moving around the world all the time, but of the ports closed for two weeks, those containers can’t get out. So, they ordered 100,000 extra containers, just in case, you know and in this kind of move of saying okay, what business am I in? What are the issues which might affect me as things unfold? And what do I have to do just in case and develop your plan B before you need it? This I think is something about crisis management that everybody can take learning from. What Hapag Lloyd experienced very clearly is this crisis has had in terms of economic impact, what started as a demand interruption because the factories of Wuhan in China were shut and what was going to happen to China production of many many things was in doubt and some of the ports were shut. So this is a supply shock quickly turned into a demand shock as countries like Italy, in Spain and other places, in confinement are locked down. So then people stop going shopping. And you know, even though people buy stuff online, they don’t buy as much online compared to what they buy face to face. So it became a demand shock. And of course, all of that affects the movement of goods and services around the world. And many of those finished goods go into containers. So this affects the container business. Now, what’s interesting is, if you read about people abandoning their global supply chains and becoming more resilient and doing all this stuff, you might say, well, that’s the end of globalization as we know it. But, you know, Rolf was very clear, with 250 ships, number three (company) in the world, he said – ‘Yeah, maybe some patterns will shift, but globalization is deeply embedded. We’re not going to start making television sets, you know, in England, again. It’s not going to happen anytime soon’. So, the fundamental trade patterns will continue, at least in their view. For many, many years, yes, there’ll be some shifts. But globalization as such, he expects to stay in place, although there might be some shifts in demand. So I thought the whole story was very optimistic. It was very reassuring to some degree. But again, like so many other companies, they took extreme measures to keep their people safe, and extreme measures to keep the business running. And I think that’s what this is really showing the companies with a clear idea of what their mission is, is that  – okay, this is our mission, how do we fulfill our mission in difficult times? And these are our people and Hapag Lloyd has 13,000 people, many of them on the ships, what do we do how to have to keep them safe? They send most of their short personnel to their houses. The people on the ships have to stay on the ships, but they put you know, protocols in place, you know, long before many other people did do to make sure that operation was as safe as it can be. Those guys were as safe as it could be.

Gopika Sampat: Like you said, different companies are undertaking different measures. We also know that companies are trying to create a safe to return working environment for employees. They are taking filled questionnaires from employees, collecting their data, asking them to report their symptoms. So now I’d like to look at this a bit differently. I’d like to understand the link between collecting this data to ensure a safe working environment and the ethical implications of this. You’ve also had several conversations regarding ethical scenarios to be considered in this situation. Companies not only have to collect this data, but they also have to understand the compliance to GDPR regulations. What is your opinion on this? Should information be collected at any cost during a pandemic? How do you think employers should balance this?

Mike Rosenberg : So before I get to information, let me go a little bit back and talk about the ethical responsibility of business, which is fundamentally to keep people safe in this kind of environment, but also to keep the business running, to fulfill its mission and to keep the jobs there. And many governments around the world approved temporary layoff plans or salary reduction programs and such. And,  what’s the ethical thing to do to keep people – pay them every month or to send them home with a government check for some small percentage of their salary? And what my colleagues think is very clear is that the ethical responsibility of business leaders is to keep the business running, so that those jobs are available when the crisis passes, so that people still have a job to go back to. That’s perhaps even more important than getting people in to the payroll and then the company goes bust. That doesn’t help anybody, except for those few months. But keeping people safe is clearly a priority. You know, you can’t expect people to come to work if it’s going to put the health of themselves or their loved ones at risk. So you have to take whatever measures you need to do to do that. Now, in terms of privacy, this to me is just connected to another aspect of human dignity. So if I do have to make layoffs, will I do it properly? Will I do it with respect for the individual, will I tell people why we’re doing it, talk to them honestly, about when we’re going to be able to bring them back to work and do everything I can to make it as fair as possible. If I do need people’s data, to be sure that they can come to work and they need to get tested, and I want to make sure that they did actually get tested and I want to check, even though that perhaps is going over a line that I would have had before, well then I need the data now – how to get that data, how to keep it safe, do you need to create a different department, make a special person to do that? You know, this is I think is where it gets to be interesting and important. A business leader needs to do it in a way, which respects the rights and dignity of the individuals who work for them. I think companies which can do that, which can keep the doors open, can do it at a reasonable cost, can keep their people safe, they’re going to win in the marketplace, because their customers are going to respect what they do. The government is going to allow them to keep working. But more importantly, the people involved will say, you know, this company has done the right thing. Now, if you do have to collect sensitive data from employees, who gets the data, does their first line supervisor get the data? Does the head of HR get the data? Or do you create a new department which is the people who keep this very sensitive data, and that’s all they do? And they only tell other people what they need to tell them, when they need to tell them because that’s what they need to do? I don’t know, I’m not trying to design an organization but I’m trying to say, you don’t want to give sensitive data to people who aren’t trained to handle it. And in many cases, you know, some of the people in different places really aren’t the right ones to hold that data. So I think again, it’s about, you know, for companies to do the right thing. It’s to go back to what is the mission and purpose of the organization? Can we achieve the mission in a way which makes sense to be who we are? At IESE Business School for example, we sent the professors home. At a certain point, we closed the school. You’re looking at my blackboard. This is actually a chalkboard in my house. You know, because we had to set up an office in my house so that we can teach and all of us have these little offices set up any way we could. So we can continue our mission of training leaders to build a better world, even if we can’t do it face to face. So you know, what’s the mission? Can we do our mission? How do we do it in a way which respects the dignity of the people involved? And I think this has to do with their pay. It has to do with their right to get back to work if we can continue the business, and it has to do with their privacy. This is just all aspects of the same story. And I think if companies take that attitude, they’ll find the right way to go ahead. If they don’t pay attention to these things, of course, they might get in trouble with GDPR or other government regulations, or more importantly, they might lose the confidence and respect of their own employees.

Gopika Sampat: Shifting the focus to technology a bit – we at DocHQ, have developed a tool called Klarity, which is backed by an AI based algorithm and that can categorize a company’s employees into low, medium or high risk and basically recommends the company which optimized testing strategy they can go for. So we believe that AI can serve as a tool for better decision making. It can even help redesign workspaces. And that’s the aim with Klarity. So how do you think AI and technologies like these can help businesses during this time?

Mike Rosenberg : Great, it’s a great question, Gopika. We had a session with my colleague, Sampsa Samila. He’s a Finnish professor, all he reads about is AI. He is passionate about AI and deeply convinced that AI is going to change the nature of business everywhere, in all aspects of society and business. Now, with the virus, what most people agree is that you’ve probably seen about 10 years of digital transformation in 4 months. You know, the idea that all professors can teach online, I mean, before, there was about 10 of us who typically taught online and everybody else said – why would I bother, you know. Now everybody’s teaching online. So it’s such a small example. The healthcare industry has been in dire need of digital transformation for many years and many people have been talking about it, and some specific places are doing amazing things. But, in general, it’s an industry which is ripe for fundamental change and digitalization and AI will clearly have a part of that. As I said before, HR Directors, Line Managers, you know, general managers of divisions and companies and country managers, none of them are epidemiologists, none of them are virologists. None of them are experts at healthcare, healthcare privacy. None of them know anything about this really, except what they’ve learned in the last four months. So they desperately need a management tool, or management toolset/toolkit, which does respond to these things they do know how to do, and takes away some of the specialty knowledge that is needed, at least puts it in a different place, either through an outsourced expert company or through an algorithm, so that they can do what they know how to do without getting into spaces, which they don’t understand. So in that context, you know, if the Klarity tool and the little I understand it, it is private, it’s secure. And it’s smart. In a sense, it can tell, you know, an HR director, hey, you know, I’m not sure Rosenberg should be coming to work. And then the HR director, can say, professor, you know, according to the algorithm, you know, you may be at risk because the way you answer certain questions or maybe you should go to your GP before and do another test before you come to work. This is putting the whole thing in a conversation which an HR manager does know how to do. Because if I had broken my arm or had been in a car accident, he or she would know what to say to me. So the point is, if the tool can help people do their job, the way they know how to do their job, and if the tools can speak their language and demystifies some of the stuff and leaves the specialty knowledge in where it needs to be and keeps the data safe, then I think it could be very, very compelling.

Gopika Sampat: So Mike, you spoke about digital transformation, and I think it is something to be considered strategically at the end of the day. From a strategy point of view, how do you think CEOs can, strategically use a combination of, you know, risk assessment, testing, tele working, social distancing measures, etc, to sort of gain an edge over their competitors or gain leadership in their industry? Do you see it as a strategic opportunity?

Mike Rosenberg : Absolutely. I mean, the (IESE) Alumni Association has been collecting stories about people doing amazing things during the crisis. And there’s a whole bunch of different parts to it. One is – companies which have done whatever the right thing is have gained enormous quantities of respect from their customers, from the authorities and from their own employees. This is absolutely clear. I have a student from Ireland in one of our executive programs and his company O’Neills makes sportswear and makes equipment for sporting teams and track suits and running gear and all that kind of stuff. And they found as Ireland went into confinement that no one is going to buy any of their stuff. They’ve got all this fabric in the warehouse. So they started making scrubs – hospital uniforms. And then actually they made very beautiful and very nice fitting and very comfortable hospital uniforms because they have all the sportswear experience. And in fact, they now have a new division, which is the hospital uniform division, because they actually do it better and at a reasonable price compared to the stuff that Ireland used to be importing. And of course, the Irish government is delighted to have a local supplier. And they’ve gained huge amounts of credibility by doing that, and a new business. So that’s one level of the story. Companies which have been putting regulators together and making masks and all this kind of stuff. All these guys have been able to say, look, we’re doing the right thing. And that’s been helpful. A second level is, you know, if you can continue to do your business and keep your doors open, while others are struggling, you know, this is clearly a competitive advantage. If you can show the world that you’re doing it responsibly, ethically, and in a safe way, even better – customers will respond better and more important than anything, employees are responding. So you know, I’ve had people, alumni who I’ve never met before writing to me about our webinar series. I’ve had colleagues in the school, and not just professors but random colleagues saying, Professor, thanks so much for doing the series. In fact, there’s a whole bunch of people doing the series. I’m just one of the people. But people want to be proud of the organizations they work for. They want to feel that they’re doing the right thing. So if a company can do the right thing, keep its people safe, fulfill its mission, and at the same time, do it at a reasonable cost, I think they’re gonna win all over the place.

Gopika Sampat: I think that is a fitting end to our discussion. Professor. Thank you so much for taking the time out today and giving us your insights. It was absolutely wonderful having you here. All of us here at DocHQ and I’m sure you are at least optimistic that companies, businesses, everyone can tide over this pandemic. And I think the key message is definitely resilience and efficiency, so that companies can come out stronger. So thank you so much once again.

Mike Rosenberg: Thank you, Gopika. And again, good luck with the new product.