Olaf Groth
Description: Olaf Groth is a Professor of Practice at UC Berkeley Haas School of Business, as well as an adjunct professor of practice at Hult International Business School and UT Malaysia, and the CEO of Cambrian Futures. His work explores the shifting landscape of globalization, AI governance, and geopolitical realignment. In this episode, we discuss his book, The Great Remobilization, and the transition from "Globalization 1.0" to a world shaped by issue-based alliances and emerging power centers. We explore fractures in global economic integration, the ethical challenges of AI, and the need for U.S.-China collaboration, highlighting how leaders can adapt to rapid technological and geopolitical change.
Website:
Books:
The Great Remobilization: Strategies and Designs for a Smarter Global Future
The AI Generation: Shaping Our Global Future with Thinking Machines
Solomon’s Code: Humanity in a World of Thinking Machines
Company:
Cambrian Futures - AI & Tech Strategy Consulting
Leadership Rolemodels Mentioned:
Satya Nadella - CEO of Microsoft
Marc Benioff - CEO of Salesforce
Show Notes:
[0:04] Introduction to Professor Olaf Groot
[1:00] Journey to Global Strategy
[3:39] Engaging Students in Global Business
[7:17] Focus on Emerging Technologies
[9:36] Transitioning to Academia
[12:35] Insights from "The Great Remobilization"
[16:35] The Future of Globalization
[18:59] Nationalism and Global Integration
[22:42] The Role of Leadership in Globalization
[26:01] Vision for a Re-Globalized World
[30:55] The New Type of Leader
[35:50] The FLIPIT Framework Explained
[38:34] Global Dynamics of AI and Ethics
[40:49] Building Trust and Communication
[42:40] Countering China's Global Influence
[44:45] Exploring Cambrian Futures and Labs
[48:29] National Strategies for AI Regulation
[54:39] Industries Poised for AI Integration
[1:01:48] Preparing the Next Generation for AI
[1:06:28] Role Models in the New Economy
Unedited AI Generated Transcript:
Brent:
[0:47] Welcome, Professor Olaf Groot. Thank you for coming on today.
Olaf:
[0:58] It's a real pleasure to be with you in your audience. Thank you for having me.
Keller:
[1:01] I'd love to start off by hearing a little bit more about what got you interested in global strategy and how you ended up at Berkeley.
Olaf:
[1:06] Yeah, look, before Berkeley and before going into business school teaching, I was an executive with companies such as Vodafone, Boeing, Qualcomm, and then a strategy consultant with Monitor Group, which is now part of Deloitte. So in all of these roles, I was involved in strategic venture development, corporate development, market development, operations development. So strategies always played a big role in my life. And of course, then as I segued into monitor group, it became the major purpose behind that role. I was a long range strategy consultant, as well as innovation strategy consultant.
Brent:
[1:46] And when you say long range, is that international or just longer time horizons? Like what's that distinction?
Olaf:
[1:50] Yeah, well, it's really both, right? You're right about that. So number one, it's long range as in longer range strategy. Although while that was the core, that wasn't all of the strategy work we did. But I was in a unit called Global Business Network, GBN, that had previously been a standalone company and that had grown out of a lot of people that were at Shell in scenario planning, you know, Royal Dutch Shell, such as Peter Schwartz and a number of others. And so the core of the work there was scenario planning and various sort of derivative frameworks, understanding the future better and understanding what your longer range portfolio or move should be.
Brent:
[2:31] Right?
Olaf:
[2:31] Hence, longer range strategy. But of course, we also did strategy for software companies, for telecom companies on near-term opportunities for product innovation, for market positioning, right? But the other side to what you're asking is really astute as well. And that is that my entire life has been about global. So wherever you look in my background, you will find the international aspects. And that's in large measure because I'm an immigrant to the United States. I grew up abroad and I came to the United States because I was interested in, of course, the U.S. Itself, but then also opportunities to branch out from there and to do business globally. And so my entire career in corporate and consulting and now in teaching has been focused on the shape of the global economy, the dynamics in changing global industries, and then, of course, the global operations of companies and the global policies of governance or the global investment strategies of private equity firms. So everything about me is kind of global. So it's both long range and wide scope, as it were.
Keller:
[3:40] Do you think like for students coming from Berkeley, for example, that might have always grown up in California, how do you try to like parse out that global aspect? Because obviously for you, it was kind of part of your childhood, part of who you are. For students that aren't used to that, that are trying to think about business in that sense, how do you kind of start to get them to think about it in that way?
Olaf:
[3:58] Yeah, it's not actually that difficult, right? Because the young generation, I guess you guys are part of that, right? Are, I think, inherently a few things, right? Inherently sustainability minded, inherently more social justice minded. And I think inherently more international, not because you have the aspiration, oh, I got to be international. That was my generation, right? I'm Gen X. But rather, I think through digital means, you all are used to being able to communicate with people halfway around the world, whether it's through gaming or through whatever it is, crypto or whatever your favorite, digital pastime, as it were. That doesn't go for everybody, but it's a broad swath of students that I encounter at Berkeley.
Olaf:
[4:45] They're readily open to that. Um, uh, and, uh, and then I should also say on the, on the undergraduate side, um, I get a lot of international students. Uh, I think I made a name for myself when I first came in. Um, I was asked, uh, are you open to BGAP, BHGAP students? Um, you know, that's the, the international, um, uh, exchange program that Berkeley has in various flavors, uh, whether I'd be willing to, uh, to teach those students as well. Next to the full-time Haas students. And I said, yes, of course, only because of my global predilections, right? And so that thing caught on like wildfire. So now in every one of my undergraduate courses, I have literally north of 50, 60% of international students, and they love the international focus as well. So it's a two-way street. The international aspect amongst the MBAs came in, I think, yeah, I mean, my perception, I'm sure the dean would have something to say about this, but in my perception, it came in sort of a few years, maybe prior to the pandemic, when students said, look, we're obviously living in a heavily globalized world. And yes, I'm from California or, you know, maybe most of them are from the United States. But I want to learn about global business, really.
Olaf:
[6:06] It's very hard to think about business without having some dependency on the global economy, right? I mean, these days we're talking about geopolitics, kind of wrecking that game, but that too is international, right? So we have to deal with that too. You can't really run away from international anymore.
Brent:
[6:23] And then with the higher concentration of international students within your courses now, are you organizing your courses a little bit differently to like further discussion amongst the students so they can learn from one another?
Olaf:
[6:35] Definitely. So in my team composition, I am all about diverse configuration, right? So sometimes I end up in a course where, you know, you have six Turkish students or six French or Norwegian students. They all came in together. They kind of know each other and they want to stay together. Sometimes I let that happen if it's a special reason for a certain course, but normally I encourage them to break up. And we had that this semester where I said, look, if you do that, you're not really learning from other international students, right, or from domestic students. And so we are kind of sort of forcing that more often than not.
Keller:
[7:18] And within your work, does that have you focus on emerging technologies? When did that come into play? And I guess, how are you thinking about those changes?
Olaf:
[7:27] Yeah, I have always been interested in technology from a very early state on. My father was an engineer, so very pro-technology and very interested in technology of all kinds. I grew up with, you know, this will sound stereotypical, but with, you know, Star Trek and Star Wars and, you know, all of those shows, right? You know, Battleship Galactica and all of that, right? And as cheesy as that might sound today, that kind of shapes you. Uh, and, and so the aspect of looking at how technology might evolve, what it might be able to do just over the horizon has always been there ever since childhood. And I think it showed in my focus in graduate school, right? So when I did my PhD at Tufts University at the Fletcher School there, one of my fields ended up being technology policy and management, international or comparative.
Olaf:
[8:29] And my dissertation was written on industrial strategy in Taiwan and Korea with a heavy emphasis on tech because that's where the growth was. That's what these countries were doing. And so it was kind of baked into my career from an early state on. And then as I came out of my PhD, my first job was with then AirTouch Communications, which was a spinoff from Pactelesis here in the Bay Area. You guys don't know these names anymore, right? It's ancient history by now. But they were dominant in the early years of the mobile revolution, right? Mobile phones. This was right around 1994, 95, right? So, and then from there, I just went from one tech or platform company to another. You can argue what's tech, right? I mean, telecom is very tech. Then I went to Boeing. Boeing is an aircraft and aerospace platform manufacturer, as it were. They never perceived themselves as tech, but they are very tech loaded, right?
Olaf:
[9:34] And so, yeah, tech all the way through.
Brent:
[9:37] Yeah. And then what made you transition from an industry jobs to like looking at going into academia?
Olaf:
[9:45] Well, that was sort of by chance, quite honestly. I got the PhD because I wanted to have optionality, right? The strategist speaking, optionality in the latter stage of my career. I had two master's degrees that were very skills focused already. So I got that PhD and with a view toward one day in an advanced stage of my career at higher age to potentially leave the corporate world and consult on my own. I had always heard that governments around the world really like people with PhDs. It's sort of a kind of less standard for better or for worse, right, in terms of getting the highest degree to be able to think through things really well. Um, and, and so, uh, so because of that, I had aimed at that, right. But then, but then about halfway through my career, uh, as I was spinning out of, uh, one, uh, consulting firm out of monitor, uh, as it were, uh, and I met an associate of mine who wanted to work with me, uh, we then decided, Hey, let's start a consulting firm on our own. And so at the time, we called it Emergent Frontiers Group, EFG, and we were helping clients look at the future of tech innovation, right?
Olaf:
[11:10] But then what happened was one night, serendipitously, over martinis with a friend downtown San Francisco, he said, hey, you're standing up your own consultancy. I know Monitor. He had been involved in Monitor as well. I know that Monitor is very sort of co-creative, lots of workshops, learning journeys. So you get really good at designing learning experiences for executives, right? And he said, why don't you take a look at this business school here that I'm involved in? It was called Hult International Business School, H-U-L-T, right? And they're one of the biggest schools out there now with multiple campuses around the world.
Olaf:
[11:51] And he said, you know, why don't you teach a course or two? And so they flew me to London to teach. And I fell in love with teaching with the students. And since I am natively global, as it were, I loved the travel aspect that the school offered as well. And so, you know, mid-career, I decided, hey, I'm going to augment my entrepreneurship with my own firm with this teaching thing. and in fact went on full-time because I was able to combine the two, right? And then later I switched to Haas at Berkeley, but I was able to maintain that balance between my firm and teaching because the two really cross-fertilize each other, right?
Brent:
[12:35] Yeah.
Keller:
[12:35] I'm sure we're going to go more into depth on the consultancy, but before then, could we hop into a little bit on your book, The Great Remobilization? And I guess starting off, what are the core tenets or arguments you're making in the book?
Olaf:
[12:49] Yeah, look, the book was born out of that uncertainty and that fog, that chaos that we all felt during the pandemic, right? Where it became very clear that the global economy and really our thinking around global industries and global business was being put to test. It was being pressure tested and it wasn't doing very well. The sort of structure of the global system of systems that we had created with ever greater integration, right? economically, financially, technologically, just think of data and AI, for instance, right? But then also, obviously, with regard to biology, right? That little virus was wreaking havoc on the economy, right? Ecology, I mean, just think of climate change, right? And all those topics were sort of thrown in the air with all the bits and pieces whirling around. And people were like, where are we going to go with this? Because clearly this is not good. And so two friends of mine, Mark Terrence and I got together.
Olaf:
[13:58] We had met at Holt and had stayed friends and said, look, it's really our responsibility as, quote unquote, thought leaders. I don't really like to call myself that, but I guess that is the moniker, right? And as capability builders and capacity builders and really leaders. We always want to say about ourselves that we point people to the true north and what's the strategy and what's just over the horizon. Now was a time where we could step up and do that in a major way. So we started doing webinars on this topic and then we said, hey, we ought to write a book together about this and hence the book. So the major tenets are that the global structure, the global economy, or what we call globalization or global 1.0 was dysfunctional, was under fire, under pressure, and wasn't going to come back in the same shape that I had grown up with. My socialization was, I always say, even in Europe under the Clinton years, and when the European Union was really taking up steam. So it was all about integration, whether it was regional or global. And we were always going to be more integrated and ideally more convergent on liberal trade, liberal investment, free movement of people.
Olaf:
[15:24] And with that, the expectation that the countries that would take this up would also become more democratic in purpose, in political orientation.
Olaf:
[15:37] That was sort of during the Clinton years of the 90s. We weren't conscious of that even then, globalization of that nature was already crumbling. And I won't bore you with all the why it was already crumbling, but it became very obvious in the pandemic, 2019, right? More than 20 years later, that the model was really ill. And we believed that this wasn't just going to get patched up.
Olaf:
[16:05] That's not to say that we disagree that more global integration is better. We agree with that, right? But we're saying that's not the reality we live in at this moment in time. We won't be living in that for the next 10 plus years. And so we needed to show people what's beyond the fog. Okay. And so what's beyond the fog is globalization 2.0, which is really a,
Olaf:
[16:30] which is really a, what we call G2 plus X world, right? So G2 is the major powers, the United States and China, clearly behemoths and 800-pound gorillas in their own right, not just macroeconomically, but in terms of innovation prowess now, plus X, G2 plus X, what's the X? The X is Europe and India, neither one of them ready or capable of leading globally just yet and with their own challenges internally, politically and economically, but big enough to be additive, right, in that construct.
Olaf:
[17:11] And so it's really four powers, right? Economic powers, political economic powers around the world, and they will assemble clubs around them that are issues-based. So the Europeans have started to do this with climate change, where they're saying, you're going to get hit with climate import duties if your products aren't zero carbon, right? And so they dictate that because they have 500 million people as leverage, a market of 500 million people. We're going to see this everywhere, whether it is migration or education or non-proliferation, trade and investment. We're really looking at a world of clubs.
Olaf:
[17:55] Now, a lot of that is driven by technology as well because countries and the clubs around them are fighting over technology predominance. You can see that clearly now in geopolitics between the U.S. And China, right? But it extends beyond those two. And technology, if we get it right, can also be the answer toward greater integration between these economic clubs again, right? As people realize that some level of global reintegration longer term is really the better way to go, especially when you're thinking about global problem solving like climate change. But that will take a while for that pivot to come about because right now we're really still in that period of geotech competition, especially between the US and China.
Brent:
[18:44] Yeah. And then how do you balance the kind of rising nationalism and these kind of clubs focusing more on their internal issues? What's best for them?
Brent:
[18:54] Do you see that continuing to rise and then re-globalization afterwards? How do you balance that?
Olaf:
[19:00] That's exactly right. I think that's exactly right. And, um, if you're asking me, you know, how are we going to make that pivot again toward greater global integration?
Brent:
[19:10] Right.
Olaf:
[19:10] And I would say that will be incumbent upon, uh, government governments and large corporations understanding that what drives people into bubbles and into tribes and into clubs. Okay. Clubs are really a response to tribalism.
Brent:
[19:27] Right.
Olaf:
[19:28] Um, is that. There is a widespread feeling in many, if not most places around the world, that globalization 1.0 has not given them the kinds of benefits that the elites around the world have gotten. Okay, so for better or for worse, as we're sitting here, you guys getting a great education, right? Me being a professor in one of the richest areas around the world, very heavily driven by tech, right? We're the elite, right? The coastal elites, right? Like in the UK, that would be London, okay? Or Edinburgh, right? And clearly in China, you have that with Shanghai and Beijing and Shenzhen.
Olaf:
[20:12] And wherever you look, you have these centers of innovation, of capital formation, and of IP ownership, of talent accumulation. I mean, just look at Silicon Valley. It's insane how much amazing talent we have here. So the problem though with that is that those elites in the minds of the many have run away with globalization and have reaped outsized benefits, right? So it's actually true empirically proven that all boats got lifted, but people aren't feeling it because they're seeing many others doing so much better, right? And those are the elites and they're raising really the cost of living around, let's say, in the Bay Area here, right? Just think about the baristas, the teachers, right? The nurses.
Olaf:
[21:03] We're making life really hard on them because we have a whole bunch of millionaires and billionaires from all these tech companies running around. But that's not good. We don't want to have a region of just millionaires and billionaires, right? So as soon as governments realize we have to get in there and we have to come to a healthier relationship with tech innovation, with wealth accumulation, whether that is through redistribution, and I'm not a socialist by any means, but whether it's through that or through some kind of common wage that gets distributed, or I guess that is wealth distribution, redistribution in its purest form as well, or some kind of cooperative, collaborative approach where people get cut into all that wealth, whatever it may be.
Olaf:
[21:58] That's what governments need to start worrying about. Once people understand that globalization 2.0 works in their favor again, they're going to be in favor of integration. But if you deprive them of economic opportunity to keep up. And on top of that, you threaten their identities with all of that global migration, right? And it's happening so fast, they don't have time to even adjust, right? Then you shouldn't be surprised when people withdraw into tribes. And so I do think our leadership, yeah, I mean, saying it has failed is harsh, right? But I don't think it has done a very good job at addressing that.
Olaf:
[22:36] And leaders for Global 2.0, and that's my generation, it's your generation need to address that. And I think then the doors will open again toward greater global integration.
Keller:
[22:48] When you're looking at the international clubs, would you characterize trade agreements within that or more so issues-based things like climate, like other aspects of focusing on a particular industry? Or could things like BRICS be considered part of those clubs that are really pulling movements internationally with specific players?
Olaf:
[23:06] Yeah, definitely. So the traditional candidates are the regional agreements, right? Whether that is Mercosur or whether that is CARICOM in the Caribbean or the European Union or the new Mexico-US-Canada agreements, APEC, ASEAN, etc. So they're there. The question is, will they get atomized even further? The European Union is under a lot of pressure right now with Brexit. You guys saw the elections in Europe. Very heavy winds on the extreme left and the extreme right. If more countries exit, maybe form sub-unions, right? So, we're seeing this now with some of the Baltics and Hungary and Romania, for instance, there are common sub-regional interests there. We saw that Greece and Italy during the last financial crisis in Europe were not happy with how the northern countries were dictating terms, right? And so it's easy to see how we might get an even further granularity or breaking down of those clubs into micro clubs, right? And so, yes, most of those will be structured around economics.
Olaf:
[24:29] I am a big fan of, and this might show some of my bias, Bill Clinton's dictum, it's the economy, stupid, right? I think when you squeeze people by their livelihoods, they all kinds of bad traits will come out, right? Threaten somebody's livelihood and they will turn against you pretty quickly. You know, all the other highfalutin sort of values that we throw at people to me are, will not land on fertile ground unless somebody is, uh, at least has, you know, some sense of, I have an okay way to live. Right. Um, and so, so yes, economics really important to me is the foundation, uh, of, of those clubs, right. And then you'll have identity issues layered on top. So we're looking at heavy, heavy migration in the coming decade, uh, with climate change. We're seeing the trouble that that is giving in Europe.
Olaf:
[25:27] Now, Europe can't do without migration because the demographic period is upside down, right, a pyramid. But culturally, super difficult, always has been, more so now. You know, that whole talk about walls and migrants here in the US. And by the way, we have similar problems in Asia. So when 500, 600 million people ostensibly migrate from the global south to the global north, that's going to create issues. So there'll be alliances and
Olaf:
[25:57] clubs formed around, uh, migration and the movement of people. I'm not, I'm not sure they're going to be called that, but you know, people, countries will get together and say, we got it. We got to have some, some solution that is shared here between different countries. Right.
Brent:
[26:12] Yeah. And then for like the listener who might not like, what is your vision of the re-globalized world? What technology is going to get us there, be implemented? How might it be? Yeah. different than today's idea of globalization.
Olaf:
[26:29] Yeah. So, so let me first say that I want to acknowledge that, that today we have upwards of 4 billion people who are not yet digitally connected. Um, and so when we talk about technology driven integration, we have to be careful that we always consider that and that we figure out, well, what's going to happen to them? How is that going to factor in? How can we enable them? And too few people do that because we're caught in our bubbles, right? And this is where, you know, Kai-Fu Lee, for instance, whom I happen to know well, who introduced his first book alongside mine in the U.S. In 2019 or 18, I guess, spoke of digital colonialism. So, will China and the United States try to go after those undigitized and compete for them, right? And try to mine them for data, right? Or revenue or both.
Olaf:
[27:28] So, that's a bit of a caveat here, right? Now...
Olaf:
[27:33] For better or for worse, the techno-intelligentsia will manage to still forge ahead and drive the greater scale and connectivity of advanced digital technologies, such as artificial intelligence and the data and data science that comes with it. Uh, we're also seeing other technologies now, uh, taking up, uh, speed such as, um, uh, such as, uh, brain computer interfaces, for instance.
Olaf:
[28:10] Um, we are, of course, we already see AI and data science in genomics, um, and, you know, data, uh, as well as, uh, uh, as well as people, as well as genetic code, um, travels across borders, whether we try to prohibit it or not, it has never ended and never will end, right, to travel and flow. And so the digital innovators around the world will keep forcing that and facilitating and enabling that for two reasons. The first is that digital entrepreneurs need to scale, right? That's number one. And we now have super powerful platforms, right? Multi-trillion dollar valuations here in the United States. The Chinese are a step behind, but not that far. They're trying to scale out through the Belt and Road.
Olaf:
[29:04] And from China's perspective, it's about political control. Making sure that China has enough energy is the other one. Making sure that China is not attacked and can manage risks through surveillance technology that is overlaid with the Belt and Road. So what I'm trying to say is that digital entrepreneurs trying to be commercial and political control instincts are actually coinciding to keep driving that dispersion and diffusion of digital influence. And so the question is, how do we shape that? Do we shape that for the better?
Olaf:
[29:47] Where we include all of those that aren't digital yet, where we enable a healthy degree of manageable and managed migration, along with all the healthcare issues that come with it, all the labor issues that come with it, all the political issues that come with it. The only way that we can manage that is if we influence the rollout of these digital technologies so that we get the ability to exercise command and control. Okay. Because, uh, I mean, that's another way of saying we're going to enable people. Yes, but we also got to know where they are, right? It's got to be managed. Um, and so that's hairy, right? To some people, uh, who may be humanitarian minded, that is empowering somebody to earn a living in a host country, maybe with crypto, right? To other people, it's no, I got to actually track them, triangulate them, see where they are, see what they do, and make sure they don't do anything bad, right? So one person's surveying is another person's surveillance, right? But again, we got to shape that.
Keller:
[30:56] And do you see that leading to a larger shift for entrepreneurs to in some ways have to become more political or I guess for nations to have to become more business-minded? Because if you're trying to go into, let's say, the 4 billion people that don't have access to digital technologies. If you're going into a new country, you're going to have to think through that government structure and really focus on that first before you think about the tech. Have you seen any shifts, I guess, in the trends of the types of leaders that are going into these countries?
Olaf:
[31:26] It's definitely very true that this world that is so geopolitically infused right, requires a different kind of leader. And we have called it a design activist leader, right? Every prof's got to come up with some Monica.
Brent:
[31:45] Right?
Olaf:
[31:45] But really what we meant to say is that these are leaders who need to step beyond a 1987 MBA paradigm. So let me be very clear on that. The leaders that were educated in the 1980s that are, or even the early 90s, right, often don't have the tool sets to say, okay, I have to deal with geopolitics on a daily basis, right? I mean, you see what's happening in the Middle East right now. I mean, I got one of my guys stuck in Jordan who was running a workshop over there as ballistic missiles flew overhead and the Israelis were shooting them down with shrapnel raining down on them. So that will not end anytime soon, whether it's Ukraine, whether it's Taiwan, whether it's the Middle East, this will not be solved in one global solve over the next couple of years. So leaders need to understand that and design their business to absorb these shocks, but also take care of their people and understand what this means also for their customers. So they have to develop a much greater and more and all-encompassing stakeholder view, right? And we've always talked about stakeholders in the realm of sustainability.
Olaf:
[33:06] Now there is much greater pressure that is hitting you in the face, right? With sustainability, we always say, yeah, yeah, it'd be nice to have good quality air and climate change, but that's a decade out. And people always thought they had time. They have no more time. We've run out of time, right? Whether it's on climate change, um, you know, where- We are fast outspending our budget on carbon emissions and are not going to stay beyond below 1.5 degrees or whether it is dealing with these geopolitics, whether it's dealing with new energy politics around the world as China becomes more powerful and the petrodollar is starting to decline in importance. All of those things, right? Identity politics in certain countries, tribalization in certain countries. And the design activist leader has to not just have situational awareness with the help, ideally, of these task forces and SWAT teams we outlined in the book, but also modern simulations that are dynamic, that are predictive. So, harnessing technology tools, right? And then, of course, having patience with all of that and leading people in the organization to respect this new paradigm. That is an entirely different mindset that I think goes way beyond what leaders who were educated decades ago were trained to do really well.
Brent:
[34:31] Is that where your Flip It framework comes in? Like creating those resilient organizations? Yeah.
Olaf:
[34:36] So the Flippin framework is a strategy framework, or I would say a strategic leadership framework, right? So there is that. There is a strategic leadership framework, and I can talk about that. And then there is the new strategic capabilities that an organization and a leader has to have, right? And so previously, just now, we were talking about the capabilities. As a design activist leader, I have to A, think about stakeholder groups and think across stakeholder groups and have empathy. Really, really tough when you don't like the other stakeholder group at all. I mean, we have all this othering and this hating going on across, but if we don't have leaders who can bridge and set the animosity aside, we're screwed. Excuse my language. So that's one. But they also have to see new building blocks around the economy, and they have to see new operating logics and industries. So this can't be the 1980s paradigm of, you know, oh, we just always have to make sure that the government is, you know, laissez-faire and stays out of my stuff or that we have greater integration, lower tariffs, right?
Olaf:
[35:47] We have to work with those things. They're here and they're not going away. So seeing new building blocks, seeing new networks of these different resource flows around the world and recognizing all of that, those are capabilities.
Olaf:
[36:04] Now, the design activist leader can deploy the FLIPIT framework, and the FLIPIT framework enables them to think about this strategically about any given problem, right? So FLIPIT stands for forces, right? You identify tectonic forces that are changing your industry or your domain. You look at when they collide, what's the new operating logic in that domain that bubbles up, right? Then you say, okay, what are the patterns that I'm now observing out there? What are the implications for my industry, for my organization? That's the I. And then how do I triage my existing strategy, organization, capabilities against all of that? We have to make tough choices as leaders. There are some things you will no longer need to do. You got to chuck them. You got to divest yourself of them. right there may be vestiges of globalization 1.0 that are not going to help you and 2.0 right and then you're going to have to acquire a whole new swath of capabilities right show me a leader who was educated in even the early 90s who is uh natively savvy about things like blockchain and artificial intelligence and data science well you know that's okay but you then have to bring in a whole bunch of people who are, and you have to infuse your organization with more of a data-driven decision culture, right? That's a pretty tall order to most leaders, right?
Olaf:
[37:31] So with the flip it framework, it gives you a strategic path to think about how do I flip, right? From how do I flip chaos and this fog into new opportunity horizons beyond, but it is a transformation activity, right this is not the sort of old strategy you know that we used to to to teach about you know just you know do your market fit analysis and see what your competitors are doing and you know string together different capabilities and you know and you'll get there right so straight line this is very this is a very wiggly line sometimes it's very circular and you have to have patience for that. So hence sort of the ability of a leader to think more in systems than straight lines, right? So, uh, so Flippit enables you to do that step by step while exercising the system thinking, the empathy across tribes, right? All the softer stuff. That's why we call it a strategic leadership uh, concept or framework than just another strategy framework.
Brent:
[38:35] Yeah. One second.
Keller:
[38:30] So stepping out of just leaders specifically and i think looking more towards national systems how do you propose countries let's say the hegemons u.s and china of building integrated systems especially focused on tech and ai given the fact that ethically there's a lot of differences and building systems with different ai in china in terms of what they view as their collectivist society compared to the US,
Keller:
[38:29] there really isn't a huge room for integration as it seems right now. But what are some of the steps you see moving forward? Is that including the flipped framework or are there other things we have to think about when we scale out to that level?
Olaf:
[38:43] Yeah. So, I mean, you're right, of course, to point out about those differences, right? And clearly nobody in the West would endorse China using AI or surveillance technologies enabled by AI to subdue Uyghurs or any other minority or anybody who is a dissenter, right? But I also think we need to be careful that we don't overhype the differences, right?
Olaf:
[39:09] There is that corporate sort of speak where people say, you've got to balance celebrating your similarities and your differences, right? It's okay to value the differences, but when you use the differences as an excuse not to talk to each other, you're in trouble, right? And so we have to talk to China. And I think President Biden and President Xi did take a stab at that when they met out here in San Francisco, in the San Francisco Bay Area, and they decided, amongst other things, that they were going to have a joint commission on artificial intelligence, okay? Because there are a lot of problems to be solved that are joint problems. Climate change is one of them. We can't solve climate change without artificial intelligence and data science. It can't be done. It's too complex. Governments have tried and they're not succeeding. So tech needs to be layered in there. And so I think this kind of joint task force or commission is a good first step, focusing on the commonalities and the similarities first in our overlapping interests.
Olaf:
[41:21] That does not mean you take your eye off the ball being vigilant when it comes to, you know, potentially U.S. Code or U.S. models or AI chips ending up in Chinese war machinery, right? So clearly, but there are ways to safeguard that, right? Just because you guard against one thing doesn't mean you can't solve problems
Olaf:
[41:46] with somebody on another level and another domain. And look, we've done this before. We did this in the Cold War with the Russians, right? We were the starkest of enemies when it came to nuclear proliferation, but we still built and ran a space station together. And, you know, that may be a bit of an overused example, but there are areas around the world, issue areas where we can solve problems together. As you do that, you create rapport, you create trust, you create relationships, right? One of the biggest assets that we had in keeping U.S.-China relations secure until about, what, five, six years ago or so, maybe a little bit longer, was that generals and admirals on this side of the Pacific had personal relationships with their counterparts in China.
Olaf:
[42:43] Uh, that way, when there was an incident of some sort, they could pick up the phone and say, let's clarify what's happening here. And to some degree, trust each other, right? Uh, without that trust, you can't know what's what. Okay. And so, so we have to get back to that level of, uh, dialogue to build trust, right? Verify. I'm a big fan of, uh, you know, Reagan's mantra of trust, but verify. And you can have both, right? This whole separation of doves and hawks in national security, I think, is a fallacy, right? Of course, we have to be vigilant, no matter who you are, and China happens to be a bipartisan issue in Congress. We just have to make sure that it's not a bipartisan issue in just one direction, but that we are open to dialogue, to join problem solving and to learning about each other as we do that.
Brent:
[43:41] And then do you think like the West, either US, EU, others should be going out and kind of like countering some of the moves China's making, whether it be like the Southeast Pacific or like with BRICS and investing in Africa, of like giving some of these other nations an alternative to like Chinese investment to kind of democratize a bit of like the global development?
Olaf:
[44:04] Absolutely. So, I think the president has taken a good stab at this.
Brent:
[44:11] Was it Biden?
Olaf:
[44:12] Biden.
Brent:
[44:12] Yeah.
Olaf:
[5:4413] With, I believe, it was a $50 billion commitment to Africa on specifically clean energy technology and digital and AI. I think that the G7, with its global partnership agreement vehicle of $600 billion throughout the Belt and Road, is another way to encounter China's influence and to give countries an alternative and let countries choose, right? This doesn't mean we're going to hit each other over the head with clubs in the Belt and Road, right? I'm not talking about proxy warfare or domino theory or whatever it may be. I'm talking about constructively saying, here's what we got to offer. We're bringing the best of our technology, of our money, of our governance to the table, and then compare that to the Chinese offering and take your pick. Right and some countries will pick the united states or or or the g7 uh and and and some might stay or or pick china um and uh and then we'll we'll see what the reasons are for them doing that right but yes absolutely you know this whole like withdrawing behind you know u.s borders.
Olaf:
[45:38] Isolationism isolationism uh pure is not going to work for the world and it's not going to work for America.
Keller:
[45:46] And then pivoting a little bit now, we'd love to dive back into Cambrian Futures and Cambrian Labs. Could you start off with just explaining, we explained a little bit of the initial start of the consultancy, but could you start by saying what are the main issues you guys are looking at, the main problems you guys are trying to approach?
Olaf:
[74602] Yeah. So Cambrian Futures is an advisory think tank, essentially a research think tank on the frontiers and futures for emerging technology. So we help executives, investors, government policymakers see beyond the horizon and then understand what the implications are for their business, their investment portfolio, or their citizens, and then craft policies and strategies against that. We are a number of experts on strategy. That is sometimes long-range scenario planning, sometimes innovation strategy, sometimes corporate strategy. We have people on the team that understand economic development strategy. And we have a whole range of people who deeply understand technology. And when we don't have technology expertise of a certain kind in our core team, because we're a small team, we go to our network and we also have a board of advisors of about 28 people that hail from various domains in the economy, including technology. So we create clarity and then strategy and strategic concepts for our clients. We focus on technology.
Olaf:
[47:25] Those customer segments that aren't already technology native, meaning that aren't already in AI or data science, right? Sometimes we make an exception when somebody in tech says, look, we understand the tech. We just don't understand the government policymakers. And you would be surprised how many tech companies don't understand policy. It is actually scary, scary as hell. Uh, I mean, some of the most powerful companies out there, I'm not going to name names now, but you ask them how many, you know, policy staff do you have in Europe? And they're like, uh, one or was it three?
Brent:
[48:01] Right.
Olaf:
[48:02] Uh, and meanwhile, they're marching toward a trillion dollar valuation or more. And that is just not right. You can't be that influential and not talk to policymakers. Now, most of these companies realize that, right? So when they realize that, they call people like us for help and they say, hey, what do I do with this? And so sometimes we do work with tech companies, but we mainly focus on governments, investors, and corporations that aren't tech native, as it were. Now, when you talk about Cambrian Labs, that's a design studio. That's a subsection of the people that are helping on the Cambrian Futures side, which is an advisory model. On the Cambrian Lab side, we take some of the solutions that we research and we say, if nobody else is doing it, we'll patent it, we'll conceptualize it, we'll design it in a concept, and then we'll patent the IP. And we have done that for important areas like privacy computing, some call it conditional data access management, right? And that sort of straddles privacy computing and cybersecurity. So we have filed eight patents, two more coming, five are awarded, right? But that's just an organic extension. That's not the focus of our business. That is just sort of like, hey, we've got it. We may as well codify it as an asset, right?
Brent:
[49:29] And then when you're looking at how governments are currently approaching, like, regulating AI, I know California, like, Newsom just vetoed a recent bill. How do you suggest, like, do you think the governments are approaching AI correctly, first of all? Second of all, if not, like, how should we approach regulating AI?
Olaf:
[49:53] Yeah. So, yeah. Luckily, we are seeing a movement toward more and more countries developing national AI strategies. We actually think that's a very good idea. Eventually, a national AI strategy should support and be consumed by the overarching national economic development strategy or the national socioeconomic development strategy, right? Because AI should serve that. But in order to address gaps in capacity, capabilities, and national assets, you often have to have that sub-strategy focused on AI. More and more countries are doing that now around the world, including the global south. That said, we are still seeing some very significant gaps, mostly in Africa. We have maybe five or six countries out of 50 in Africa that have nationally high strategies. The situation is a little better, but not much better in Latin America.
Olaf:
[51:05] Eurasia, kind of wobbly. There are some that are further advanced than others. Kazakhstan, for instance, is doing a little bit better. Um, but, um, but, but yes, so it's a, it's a mixed picture trending well, uh, but, but given the speed of AI innovation, right, I am naturally impatient about seeing more momentum by more countries, right? Uh, because they, because they need to start to match the speed of innovation, which gets me to the second question of regulation, right? Um, yeah. Look, regulation is always perceived as, okay, well, if we cannot keep up with the speed, we got to slow it down. There's some validity to that, right? Because you got to make sure that this thing doesn't run away with the health, mental or physical of your citizenry, right? And there are some existential threats here that we need to be very clear about and where we do need to slow things down. But I think regulation in general can send very good impulses for innovation.
Olaf:
[52:16] So the focus shouldn't be a blanket statement of let's slow this AI thing down. The goal should be let's get it to innovate in the right directions. Okay. If we want more AI to benefit more stakeholders in the civic community, the civic sector, okay, let's incentivize that. If we want to have more governance and more risk mitigation mechanisms baked into AI innovation, okay, let's incentivize that. Right. Uh, and, and California is starting to, uh, uh, nudge its way to that balance. Right. Uh, I think the, uh, the reason for why the governor has decided not to sign the bill at this point is that there are some valid concerns around what that will do to, uh, the, uh, to small and midsize companies. Right.
Olaf:
[53:20] Um, it's often held that, well, they, you know, if they have a hundred million dollars to spend on AI development, then they can spend a couple of million dollars on governance. But that's actually a fallacy, at least the bill that I read last, and it may have been a version or two back from the current version said, well, it's either the hundred million if you're a model creator or 10 million if you are a model, uh, customizer as it were, right? I'm paraphrasing.
Olaf:
[53:50] Well, you know, 10 million is spent really quickly when you're an advanced startup trying to scale out and you're trying to customize your models for that greater customer set, right? And so I do think we need to keep that balance in mind of protecting and also incentivizing, right? And I think that needs to be thought through more carefully. I think the European Union has put a courageous stake in the ground with first the GDPR, now the EUAI Act. I think the GDPR was more flawed than the EUAI Act, but I think the EUAI Act is still worthy of a significant improvement. And I think California is looking at that and is saying, we don't want to be that restrictive. What California has over the EU is we actually have a healthy innovation ecosystem that scales out really well. I'm going to be maybe overstating the point that Europe doesn't.
Olaf:
[54:54] It has immense science talent, immense entrepreneurial talent, and it has the potential to be a great third voice on AI innovation, but it does not yet have an established track record of its AI and data science innovation ecosystem actually being able to scale. So very naturally, you know, they are more protection inclined than we are out here. We have a lot more to lose on the innovation side. And that's not to say you should pitch an innovator's wealth against some person's, you know, death. That's not what I'm trying to say. I'm saying we have to do both. We have to eat our cake and, you know, yeah, right.
Keller:
[55:39] And when we're looking at regulation, kind of pointing the direction of innovation with AI, what are some of the industries you think have the greatest potential for AI conversion points? And I guess we could break that into, in the shorter term, industries that it would be easy for AI to get integrated with, and then longer term, things that it will be harder for AI and high tech to really integrate into, but once those changes come, might serve the greatest potential benefit.
Olaf:
[56:04] You mean, uh, convergence and integration into other domains.
Keller:
[56:08] Yeah.
Olaf:
[56:09] So, uh, so the, the easiest tends to be domains that are, that are already have a lot of structured data. So finance comes to mind, right. Um, and, uh, and operations in enterprise services and in factories, right. Um, uh, and so, so, uh, those areas that have structured data, right. So ERP, CRM type areas.
Olaf:
[56:36] I would also put healthcare into that. Healthcare is inhibited, of course, by data regulations. In the United States, that's HIPAA.
Olaf:
[56:48] There are ways to get around that, but there are very serious limitations. But we have limitations in finance as well around people's personal finance data. So those are areas, I think, that are the low-hanging fruit. And we're seeing this. We recently had an engagement with a client around the future of AI and clinical treatment decisions and recommendations.
Olaf:
[57:13] And so I think those are really exciting, really exciting horizons. Um, I also believe that, uh, using AI in ecology, figuring out how ecosystems work, I'm going to be moderating a panel with, uh, with two entrepreneurs next week, um, on AI, uh, in the physical world. So, uh, one offers AI supported satellite, um, surveillance intelligence on, uh, for sustainability, uh, on. So what, you know, under climate change, uh, uh, influences, what do certain swaths of land look like? Uh, what will harvest be like, right? What are the weather influences, et cetera, and modeling that in a predictive fashion, super exciting. Um, uh, you can incidentally also monitor population flows, right? Uh, again, keeping in mind, and we'll ask those questions next week, you know, what are some ethical considerations here as you surveil from the sky and predictively model what might happen next, right?
Olaf:
[58:19] So that, then we have another entrepreneur looking at how to get more data out of the internet of things. So factory environments, interconnected machines into supply chains, you know, getting more data pools together, maybe creating some data twins at some point, again, sort of predictively modeling how certain things are going to behave, right? All of that is convergence of AI and data science on the built environment, right? And that's not even talking about sort of the everlasting conversation about autonomous cars and drones and things like that. I think another exciting area is AI embedded in robotics.
Olaf:
[59:02] So can you make cobots, for instance, contextually smart in real time? Some of that is obviously already happening. But can you give that more self-learning capability, more sensory inputs? You know, can you give robots skin, for instance, to sense? Can you give them various other sensors of, you know, of sound and of chemicals maybe? And then can you give them memory, right? And not to sort of go to Blade Runner kind of territory, right? But can you, you know, that then yields a different intelligence of a cobot, for instance. Not to say that that will ever be like, you know, Terminator kind of scenario, but rather a smarter collaborator for humans in a workspace. Right so there there is all of that um i mean i could spin this endlessly yeah.
Olaf:
[1:00:17] Yeah So the other convergence is, um, uh, you know, between AI and data science on one side and, uh, the real world is, uh, the physical world is, uh, smart in more intelligent supply chains. So you're getting back to the beginning of the conversation about the book, right? And we saw the breakdown of supply chains, uh, due to timing being off of the bad demand and supply match. Right. But also the fact that, um, different customs offices were shut down because people couldn't go there and we still transact a lot of customs forms and paper think about that right um uh or you know uh ships being stuck in the suez canal or the panama canal being low on water thanks to climate change right with increased uh interest increased wait times for ships less cargo making it through well that's a real problem for our economic anti-fragility, as it were, our resilience, right? So there are now people thinking about how can we create platforms that could help us get smart on supply chains, dynamically rerouting things, right? First off, sensing disruptions, maybe even predicting disruptions, then saying, okay, how would we react to that?
Olaf:
[1:01:36] How do we maybe preemptively reroute some things So they still make it there on time, um, playing through various scenarios of disruption, right? So I have clients who are saying, well, we, we can't keep investing in China to the same degree we have been now we're investing in Vietnam and in Mexico, but now, yeah, but China does the same thing. Right. And so now all of a sudden they're faced with the U S government saying, well, hold on a second, maybe we need to put Mexico on a, you know, on a watch list. And so then the clients just invested there, and they're saying, I need to have some way to play this through as scenarios, dynamically evolving scenarios, so I can continue to see things on the horizon, and before I pull an investment trigger, maybe calibrate my investment, right? Currently, we do not have truly intelligent supply chains. It's a wickedly complex challenge, but also one that is amazingly beautiful to solve, right? Because you're really solving for the backbone of the global economy.
Brent:
[1:02:42] Yeah. And then as you think, like you just listed off like a ton of different
Brent:
[1:02:45] ways AIs are going to converge in different industries. For those who are younger, like maybe still in school, approaching the end of their school, how would you suggest or advise them to, understand the technology and the ways it can be applied to all these different industries and maybe like how they could best utilize and help that convergence occur.
Olaf:
[1:03:05] Yeah. Look, I mean, I think your careers will take various twists and turns and have different phases in them. You can't prepare right off the bat for every one of these, right? But you can set yourself up for these various pivots, right? And switchbacks as it were, and changes in your career by pairing whatever it is you're studying, whether it's biology or engineering or geography or any one of 50,000 different subjects, with more data science and AI knowledge.
Olaf:
[1:03:42] And I would worry less about grades, right? That doesn't mean you shouldn't strive for good grades, but grades are not as important as understanding how things work. Developing a sensibility around what's the language that data scientists use and AI model developers use. What does their work look like? How do they do what they do? How can I help influence and shape that from the angle of my home domain know-how, right? As a biologist, it is incredibly important that you understand data science in the context of in the context of, you know, ecology. How do systems evolve and work, right? There's so much data there. And so pair your home domain expertise with data science and AI know-how.
Olaf:
[1:04:40] Worry less about grades. You know, I know data science and AI often sort of has that cachet, oh, that's math. And, you know, I'm not good at math and it's going to pull my GPA down. Look, Like, yeah, we all have to watch GPAs, but GPAs aren't correlated with job success or with career happiness or with life happiness, right? We all know that. So, yeah, pay attention to that, but don't pay attention so much that you don't take these courses. You have to. Data science and AI are not going to go away again, even if we have a blowup, right, like we had with the dot-com bubble, because we're currently overhyping AI. We're not seeing enough ROI, as it were. and I use that word loosely as meaning quantifiable benefit, right? We'll work through that. We may have a deflation. We may have a bust, but look at the dot-com bubble, right? Does that mean we don't have an internet today? We have a better internet today. And it's the same with crypto. Crypto is being deflated. Now it's got a bad name. Maybe it'll blow up, but it won't go away. Web3 isn't going to go away. The learnings we have on blockchain aren't going to go away. The foundations got laid. Same with AI and data science. It's here to stay for the rest of your life. And it's almost robust against no matter what the world will look like, right? I mean, unless we get world wars and various solar storms and everything gets wiped out, it's really hard to imagine a world in which data science and AI are not going to be valuable skill sets to have in your overall skill set.
Brent:
[1:05:09] And then would you suggest an informal education in AI because it might be more creative, more adaptable versus like the institutions we kind of have set up right now?
Olaf:
[1:05:18] Well, look, if you're at an institution like Berkeley, for instance, just to speak about my own home campus, then, of course, you should look close to home and see as part of your degree, can you do a minor in data science? We have a new degree in neuroscience now that's very quantitative and very scientific. And the new College of Computing and Data in Society does exactly what we were just discussing, the convergence of AI and data science with all these other domains. So, of course, you should look at that and see, can you take courses there? If that proves to be difficult, then yeah, take courses anywhere. Go to Coursera, get a little certificate here or there, and start showing that you understand what it's all about. Right. And then impress people by overlaying that on your existing domain. Right. Like like MDs. Right. Students in med school started to mess around with robotics, not because it was required by their curriculum, but because they knew when they were going to get out, they were going to need those surgery skills. Right. So so definitely I'm all for that.
Keller:
[1:06:28] And looking at the design activist leader, just one more time, for students that are kind of trying to find role models as they enter this new globalization, do you have any people today that you think embody those characteristics that students should look to, to study, to understand kind of the path they've taken or the way that they're thinking about the new economy?
Olaf:
[1:06:47] So I don't necessarily see a one-for-one representation of the model, but I do see people who have certain parts of it who have the sensibility and who understand the necessity. So if I were to look close to home, I would say people like Mark Benioff understand the societal.
Olaf:
[1:07:12] Political aspects of business and I think express an appreciation and have architected some of that into their organizations. So Salesforce has ethical AI architects or ethics architects working alongside product developers, and they have multifaceted teams working there. So there are people there who understand different communities of faith, different ethnicities, right? And you can't encompass the entire world in its beauty or diversity, but you can make an effort to be as multi-dimensional, multi-faceted as possible. And I think they've done that. And that's a good thing. And I applaud that. And he's also understanding, of course, that political decision makers have to regulate and I think willing to engage in dialogue, as recently shown in his meetings with the governor, etc. And his involvement in San Francisco, which is his home base.
Olaf:
[1:08:19] So that's just one example. I think Satya Nadella has the awareness.
Olaf:
[1:08:25] I think it is maybe personally articulated a bit less, but I think the... For instance, the recent investments that he obviously approved and maybe led in renewable energy in Europe and in Asia, in training people on cognitive technologies and AI. And we're talking two and a half, three and a half, $4 billion investments.
Olaf:
[1:08:52] Those are large chunks of money, as should be the case with a company like Microsoft, right?
Olaf:
[1:08:58] And so I think those are good examples. understanding the interconnections of cognitive tech with, uh, the problems it can solve, uh, as well as the problems it can, it can, it can cause, right. Um, and so, so I think those are, those are good. I think, you know, going back to, uh, my own career, uh, Boeing, uh, a number of years ago, uh, I think did something very laudable and I am grateful to have been part of that journey. They hired senior State Department officials to lead an organization that was called Boeing International Relations. And some people sort of called it the State Department of Boeing, right? Or the Ministry of Foreign Affairs of Boeing. And to some degree it was, but they were pairing with business unit leaders to understand what's the ecosystem like politically, economically, technologically, socially in a given market, where do we have to invest more broadly in order to then be able to sell planes or network equipment or aerospace, whatever solutions, right? And so I think that was...
Olaf:
[1:10:11] That was great. It was born out of necessity because Boeing had seen Airbus, of course, being a European company and having to be very much focused on social and political dimensions in its very makeup, right?
Olaf:
[1:10:28] And so Boeing said, you know, we have to compete on equal footing. But they replicated that around the world, and I thought it was a great start. I think it wasn't sufficient, and it wouldn't be sufficient in today's world anymore. And hence, you know, our focus on new geotech capabilities and the design activist leader. But I think it was a good precursor and a good precedent and something to point to, right? I worked for people like Tom Pickering, right, who was U.S. Ambassador to the U.N., India, Russia, and countries in Africa and Latin America. And that pairing of business savvy, business strategy with the, I think, much more systemic view of people who work in government was a great precursor. We need more of that and pair that with modern analytical tools, AI simulations, twinning, et cetera. That's the frontier. And I have not yet seen a shining example of that out there, but I'm looking for it.
Brent:
[1:11:31] Perfect.
Keller:
[1:11:32] Wonderful. Well, thank you so much for your time today.
Olaf:
[1:11:33] It's my pleasure. You guys are great to converse with.