Paul Keary and Ursula Burns on Teneo's CEO & Investor Outlook Survey | Teneo Insights Podcasr

Well, I think I agree with Paul that this has turned out to be, as you would expect, a boon for business. It's a boon for business confidence. It's a boon for the richest people in the world, the richest economies in the world, because this is a friendly-to-trade, a friendly-to-growth administration. It's also one where it seems like there'll be a little bit less attention on the details and a lot more like the shiny object in front. So businesses know how to play in that world very, very well, and you can see it already — people lining up to kind of meet with the man and figure out how they fit. As a past CEO, I would be doing unfortunately the same thing, which is to figure out where you can actually optimize and maximize your operations given the reality of the day that we now have — I call it a Republican Prime administration. I think they're doing what they expect. I think they're going to get caught a little bit if they don't pay attention to their employees, around their employees, and around these kind of hidden things that have already been planted and already growing — around ESG, around equality and inclusion, these areas they're going to have to pay attention to. But for the first six months, January to June, is going to be, you know, buckle up, hold on to the doors, we're going to open it up and see just how fast we can run.

Yeah, I don't think that it's too Pollyannaish at all. No matter how we look at it, there were two choices on the table in November. There was a choice of high regulation, speaking to the masses, bringing the many different classes closer together and closer to the middle — and the other side, which is what won, which is big business is good for America, it's good for economies around the world, CEOs and business leaders kind of know what to do, leave them alone, forget all this other social stuff that you guys are talking about. Those are two choices, and the choice that businesses are living in now after that was made is one that is definitely easier for them to operate in. That is literally: let's go for growth, let's do it in a way that is okay, but we're not going to over-regulate you, we're not going to overwatch you, literally do your thing, make as much money as you possibly can. And the one place where I think there's a big gap that's going to show up more and more — you say lower taxes, except for if you happen to buy something that comes from one of these high-tariff countries, we're going to pay for it, the consumers are going to pay for it. If he does go through on tariffs, it's going to be hard to reconcile lower taxes and the higher reality of just about everything you buy costing a little bit more money. But I think for business this is not a bad time at all. The overarching story is you don't have to really worry about these guys in Washington slowing you down as much as you would have had to worry if we had a Harris-Walz administration. And whether I like it — it almost doesn't matter, right? For business, it's literally right in their wheelhouse how to manage this kind of dichotomy. They know how to do it.

I think we have a little bit of a wild card in Mr. Musk in this whole conversation and how he influences this whole space. It's not really his remit, but I think he will have a lot more influence than we think and are factoring in. I think M&A — I'm generally, and this is not a personal — I'm generally for across-the-board combinations if they can drive efficiency in a way that would not seem to be consumer-advantaged. Having an inefficient platform out in the marketplace just so that we can have two platforms doesn't make a lot of sense to me, and nor does it to many business people. So I think M&A has been held back for sure — part of my business is here, it's definitely been a hard row. And I think we're going to unleash a lot of potential deals that I think in the long run will be better for us, better for the economy, better for the consumers. So I'm not really that afraid of it, and I think done well by good-meaning CEOs, it'll be okay in the long run. But there is this thing about what Musk thinks is reasonable or not and whether he starts to actually play the game in such a way that's leaning towards his interest versus the nation's interest. I don't know enough about it to know what he's going to do, but I don't feel really comfortable about it.

So separate from TSMC — this is an answer that has nothing really to do with TSMC also, because I shouldn't be saying a lot about what has to happen with TSMC. You know, the fact of the matter is that there is a reality that some of the things that we are targeting — the United States is targeting, the Trump administration is targeting to tax — there are no options to get anywhere else. If you want an advanced chip, you can say all you like about whether these guys were good, bad, or indifferent — you can buy it from one source today, maybe one and a quarter sources, but that's it. So I think many CEOs, particularly large company CEOs, understand their supply chains well enough to actually — it's just part of the game, it's part of how we are going to have to operate in the future. And they will generally, because they use it in the supply chain not at the outcome, not at the end, they will generally be able to stand harmless from what's going to end up hitting the consumers of higher prices and the like. Mid-cap is where the smaller companies — where it's going to really hurt. They absolutely will require — they are next in line to the many of the consumers and have to deal with the pushback of what has to be, if it's implemented the way that President Trump talks about it, which will have to be higher prices at the pump, at the cash register, at whatever the heck it is. So the survey showed the reality of the two different types of businesses. If you're large and globalized already, you're kind of dealing with the reality of there may be some higher prices but you have no options. And if you're smaller and literally are dealing very locally, I think they're going to be disrupted a little bit more. At the end of the day, there's nothing we can do if President Trump decides to do what he said he's going to do — heavy taxes on things coming in from Canada and Mexico, I don't understand really why that would be the case, really heavy taxes on China, and really kind of an offensive move against places like Taiwan. I think American consumers are going to have to hold onto their pocketbooks because they're going to lose a large amount of money. There is no way to implement what he has said he's going to do in a price-neutral way to most consumers — it's impossible to do so. And by the way, we knew this before and people voted for it anyway, so I think they must be ready for it.

I think that they don't know as much, but I think it's not important that they know as much as they know or should know about China. It's just they're just different market impacts. In Vietnam, does something good, better, and different to an element in the supply chain or to some global risk profile, very, very low, a lot lower impact than this one. There are two nations that actually can have this big an impact: one is clearly China and the other one is India. And so, understanding from a market perspective, right, even from a geopolitical safety perspective, these are two places that you have to pay a lot of attention. And I think not knowing all as much as you should know about what's happening in Vietnam or Myanmar is not really that big a deal. By the way, I think that they'll come up to speed as quickly as they have to. China is like an urgent thing you should learn about; India as well. I mean, a lot of people have been in and out of India for decades and decades and decades. So, I think understanding a little bit better, I just don't think that the impact is big enough for them to actually or need to be or are as steeped in the ups and downs and the politics of the space. But just about every company that's reasonably sized has an expert either in their own home or they partner with companies like Teneo to actually get some insights. So, I think they'll be well enough prepared.

So, ESG is never static; it's a dynamic obligation that companies have to their shareholders, to their employees, to their consumers, to those that regulate or legislate the industry. It's constantly evolving, it's constantly being tweaked, and CEOs are constantly subject to the political and legislative environment. They're the ones that have to try and manage through those changing personalities with changing focus points. I think one intellectually honestly has to give CEOs great credit to face off against those threats and those challenges and those changing political dynamics every time. So, I'm not a bit surprised that companies are saying that they're changing some of their ESG priorities, relabeling it, even maybe defocusing it on some aspect because they have to work within the environment where their license to operate is based by the regulatory legislative environment and stakeholders that buy their products or services. So, that's one point. I'm not as taken by the activist nature of ESG. I'm not as despondent or overzealous about these changes. I think companies tend to do the right thing in the long arc of history all the time. The piece that was most interesting, I think for me, is despite all this change, despite some of the political pressure on companies to change, there's almost 100% acceptance that their core priority is to attract and retain diverse talent. You know, you need a diverse workforce that represents the consumers and the communities that you live in, and there hasn't been any dilution of that core priority. So, I think we live in a time of another point of disruption, which is ESG that CEOs have to manage, and they have never worked as a CEO doesn't want to leave the world a better place from when they found it. What they have to do, however, is to manage the politicization of this, and it'll shift again. The next pendulum will probably occur in the next election cycle, but those companies always tend to do what's right.

It's a great question. I think I differ a little bit from Paul's belief that most business leaders, that a large percentage of business leaders actually think about leaving the earth a better place. I think that they do, but I think a large number of them don't have the strength of position or performance or whatever to fight a fight when it comes to them that is where they're going to have to defend DEI against some short-term desire of some external constituency. So, I worry about that, and so I don't think that people are, some CEOs I know are there, they're willing to have the fight standing in front of the courthouse, and a large number of them would just prefer that nobody, I'll just do what I have to do, just don't bother me. That's one. So, that aside, I believe that what we found in the survey was what I hoped we would find, and that is that these people are human. They know many different types of people generally. They don't look at them the way that DEI requires that you kind of analyze it, and they are willing to lean in and just kind of make their places attractive places to actually be employed. They want good talent, they know it looks brown, black, male, female, and so they are just marching along and just trying to stay right, particularly in tech. You know, a lot of tech and medicine are the two places I spend time on this, and both of these places have to be color blind, gender blind, a whole bunch of things just to get enough people to come close to the door. So, they've already said, you know, you I'm not going to screen for women, I'm not going to screen because we need just good people walking in the door, and I think that's a tailwind for talent around the United States to actually have a little bit more say in how they end up. Most companies, most CEOs don't think about this the way that we analyze the data. Right, they think about it as I need a great person to help me solve these problems, and they don't really lean into I need a great woman, I need a great man, I need a great person, and then they look at the results later and try to adjust programs. That's part of the problem, right? So, now what they're doing is actually reaching out more broadly in the beginning so they have the option or at least the possibility of getting a diverse pool. So, I think at the end of the day, we've asked CEOs to do things that were illogical, speak out, you know, speak out loud about all these things when we knew that if they did speak out loud, you have some of these really aggressive activists against a cause. There's no need to go that far; just do your thing, hire your people, train them very, very well, make sure that they're differentiated amongst each other, and you'll be okay.

They're not going away. Give me a break. There's a concerted effort here to change the progress rate and outcome that the United States has been on for both gender and ethnicity, racial, for sure. This is not a game. The Robbie Starbucks of the world, the administrations of the United States actually do not want equality. They do not want it. By the way, America has said maybe we don't want it either, but the political infrastructure, particularly the Trump infrastructure, has made it very clear that there are certain types of places that we can go. Women, black people, whatever, there are certain places you can go and that you shouldn't. We can't avoid the last year of campaigning. The words are very clear, and we can actually say, okay, it doesn't matter, you know, whatever the heck, but he's made it very clear where he wants to be. I think this struggle, it doesn't happen and it shouldn't necessarily happen in the C-suite of all the companies around the world. The conversation has to be had there, but it also has to happen in the streets, in the churches, in the schools, and the people who have voices. Because I don't, I mean, unless I missed something over the last 12 months, it's been clear we don't want you here, we prefer if you stayed wherever the hell you were, but not where you're heading, and just leave us alone. And by the way, we're going to legislate that, we're going to actually try to drive it legally through structures. I don't believe that we can now say, oh yeah, it's going to be okay now. He's been clear, told us who he was.

I think it's what I always say. What I would expect, right? When AI first came out, I remember when cloud started to be the thing, right? Every speech that a CEO made after cloud became a hot topic included the word cloud in every paragraph. You had to say it 20 times even though most people were doing nothing on it a couple of years ago. That's what AI was. It was like you have to say something. Who the heck knows what we're doing? What I'm seeing in all of the businesses that I'm engaged with, either on the board of or public or private, is that people are now, business leaders and businesses in general, are now a little bit more versed in what they could use this for. Like the real conversation is not that we're doing some AI stuff; it's very specifically that we're doing AI in insurance, it's loan-making sales pitches to future clients, etc. So, I think that the conversation has matured in that CEOs now, more and more, after playing around with this for a couple of years, are learning exactly how useful it could be in their business and in many cases applying it one or two or three times. In some cases, I mean, when to board to the Mayo Clinic, this is like front and center to how they provide care. So, I think it's a natural kind of progression where you had to defend yourself in the beginning to say the words and we'll figure it out, and now it's like real. Yeah, we kind of know what we could do with this. It's still, I think three years from now, four years from now, it's going to be even. It's like cloud now, nobody even talks about it, but it is there. It's everybody's infrastructure is on the cloud. You're going to find a large amount of the businesses, small big, small here there, are going to have it in their lives. We have to watch as business leaders, as educators, as citizens of the world exactly how we want this to come out, and this is where a lot of the discussion has to happen. How do we want this to come out, if you can even think that far ahead? And at least try to legislate either socially or legally towards that outcome, because if we don't, it's just going to be like some of the, it's going to be like social media where it kind of shows up and you go, oh my goodness, that's not what I expected it to do or where I expected it to be. I hope we're a little bit smarter about AI than we were about social media, but I think it's unstoppable now and it's becoming more and more natural, not just like, oh my God, we don't know what to do.

There's definitely going to be a different set of technical skills needed. I agree with what Paul was saying earlier about the idea that you could be a good general manager and actually just, I'm just a good general manager, I know a little bit about everything, it's going to be less important than I know a lot about certain things. Totally, you know, you're going to have to be technically astute, a lot more technically astute. And I think you're going to have to be stronger because the constituents now, when I was CEO, basically you delivered a bottom line, top line, bottom line, that's it, go off and do your job. And if you did those two things, you kind of got air cover from your board, you got air cover from your employees even if they didn't love you, but you got air cover. Those days are absolutely done. You need to do those two things and you have to be able to actually have a position and explain it in a way that people buy it. It's almost like an actor, they're not necessarily acting, but it's like an actor. You have to be able to not only know the words but you have to look the part, and the looking the part is have a strong position and be able to articulate it, lead your company through a lot of soft stuff that you don't even know how to measure. You know, a lot about technology, know about the globe, but kind of stand in position in a way that your constituents can actually see strength. And I don't mean like men carry, I just mean strength, calm, organized, clarity. I think that's more than ever going to be, you have to pass that before you can even get in the door.

Yeah, yeah, that's a very smart thing you just said. Yeah, it's just a strange position to be in, and I think we need to make sure that as business leaders, we had a meeting earlier today about ESG in Teneo, and one of the things that you have to step back and make sure, I think, as a business leader, is that you're clear after a lot of input from the constituents that you need input from, that you as the leader stand and be very, very clear about what your company is going to do and stand for. And this idea that you can be in the middle and try to please everyone, we found, I mean, we knew this all along because we have children and families, you can't please everybody all the time. And we have to be clear and kind of strong as we lead people through things and kind of turn this away from immediate gratification right now. And I love you even though you're standing on a side, and I love you even though you're standing on X, and we'll be able to give everything to everyone. The answer is I love you still, but we're just not going to be able to give everything to everyone because either we don't agree with it or we can't afford it or both, right? So, it's a strange time, I think, in the world, but definitely in America.