#NDTVProfitAtWEF | PwC's Bob Moritz says a degree of volatility might be seen in interest rates across the world.
Watch him in conversation with Niraj Shah at #Davos2024.
Read: https://bit.ly/3HqeK6g
Watch him in conversation with Niraj Shah at #Davos2024.
Read: https://bit.ly/3HqeK6g
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TVTranscript
00:00 What I'm referring to there is you've had a decade where leaders around the world have known nothing but low interest rates,
00:08 and in some cases negative interest rates.
00:10 And what you're going to see now is a degree of volatility in interest rates that may differ depending on what part of the world you're in.
00:16 In some cases they may be coming down, in some cases they still may need to go up to contain inflation and the like.
00:21 So how good is leadership in managing through those ups and downs and the volatility that ultimately we see?
00:27 And that goes not only for interest rates, but also goes for inflation more broadly and supply-chain disruption.
00:33 So if leaders are not equipped to manage that and move with speed, they'll fall behind their competition and therefore fall behind the transformation of need.
00:41 And yes, even fall behind the short term that they actually have to manage to as well to satisfy the stakeholders.
00:47 Just one follow-up question there. Project IRRs. One is managing interest rates and cost.
00:53 The other is what happens to multiples, to what happens to project IRRs.
00:57 Now how do you see that because the world over the next decade, or maybe two, would be materially different from the last 15 years because of the low risk not being there at all?
01:05 Yeah. It's clear that when you look at significant projects or capital improvements, that the onus is going to be on CEOs to demonstrate that ROI.
01:16 And what we found historically is that management teams are not generally good at getting the outcome they're looking to.
01:22 They might be good at doing something, implementing a system, doing an M&A transaction, but getting the extraction of value is much harder.
01:32 And this means they are required to actually drive more change in their organizations to say, "What will we do demonstrably different?
01:38 What cultural changes have to happen? What data do I need to make different decisions?"
01:42 Rather than just put in a big technology change or, for that matter, do an M&A deal.
01:47 So the pressure on outcomes is only going to increase, hence the reason why leadership teams have to be much more prepared to think about optionality, speed, and scale, as well as the ability to deliver the end result of IRR or ROI, as I called it.
02:01 Got it. The other aspect is we're moving from a world which is highly globalized or globalization to what you may call slowbalization.
02:09 I mean, there's just this disjointed, this fragmented world. Is that something that could, if not coming in a survey, but of concern to you as you look at the corporate world?
02:21 So first, I think I want to put a personal point of view out there. Many people say globalization is dead.
02:26 I'm going to argue it's not dead. It's got to be rewired.
02:29 What you see is the world is smaller than ever before. The need for information flow, the combination of impacts from a climate perspective that have huge implications no matter where you may be residing.
02:39 We know there's no geographic borders for climate, for example.
02:42 And likewise, as you think about the implications in one part of the world on the other, what's changed is the manner in which we're attacking those problems.
02:50 So before, you would have had large numbers of countries coming together on macro policy issues to make a decision and try to work together.
02:57 That's no longer the case. What you have now instead is bilateral deals, trilateral deals, regional arrangements, and a package of puzzle pieces that they're all coming together to be more global in nature.
03:09 And so operating through them and deciding which ones to join and which ones not to join is going to be another skill set.
03:16 Before, it was easy, joining this global initiative. Now it's, hold on, I don't like that one for X, Y, Z reason.
03:22 I like this one because it's going to be much more productive, much more action-oriented, and much more relevant for me.
03:28 [MUSIC]