APEC CEO SUMMIT
OCTOBER 19, 2001
"A WORLD OF CHANGE"
© Copyright 2001 Hewlett-Packard Development Company, L.P
All rights reserved. Do not use without written permission from HP.
Thank you. Good afternoon, everyone.
One of the things they teach in business school is that positioning is crucial. How you position yourself in relation to your competitors can mean the difference between success and failure. Applying this principle to today's program, I keep wondering how it is that I got positioned to speak in the slot before the President of the Russian Federation - on the subject of change, no less.
Hewlett-Packard has been at the center of a lot of change in our 62-year history. But President Putin was elected president in the first democratic transition in Russia in 1,000 years. Talk about giving new meaning to the word "invent."
All the same, I am honored to be here in Shanghai, not only to attend this conference, but to celebrate an anniversary.
FROM THE START
It was 20 years ago next month - on November 9, 1981 - that Hewlett-Packard opened our first office in China, in an old municipal factory building in Beijing. A day before the opening, there was still sawdust on the floor, and two of our engineers worked so hard to get our systems ready that they slept overnight on folding cots. When we opened, it was the first partnership of its kind to be sponsored by the government of the People's Republic of China in conjunction with a foreign company.
One newspaper recalled that the day was marked by "much handshaking and drinking of tea." At the ceremonial dedication, our representative at the time, Bill Doolittle, said that it was our hope that by exchanging experiences, not only would we contribute to the friendship between our countries, but to the progress of our industries and the growth of our economies. In short, that we would both do better by working together than either could do by working apart.
Twenty years later, I am proud to say that we have fulfilled that hope. And I think that statement perfectly describes the spirit in which we all meet here this week. I don't think anybody back in 1981 could have imagined that less than a generation later - thanks in part to the work of the people in this room - Asia-Pacific Economic Cooperation (APEC) nations would account for a combined $18 trillion in Gross Domestic Product (GDP) and conduct 44 percent of the world's trade.
And I'm certain that nobody that day - even though they knew firsthand the talent and spirit that still defines China today - could have imagined the remarkable degree to which China would be helping to lead the way. This city is a shining example of how one of the world's oldest civilizations is helping to make the most of some of the world's newest ideas.
It is a special point of pride for HP that during the year that we celebrate the 20th anniversary of our first office in China, China will become a member of the World Trade Organization (WTO). The decision China has made to transform its economy and become part of the world's trading system will benefit its economy and its people.
I also want to applaud China's decision to join the Information Technology Agreement (ITA), to eliminate all import duties on IT products over the next few years. Over the next four years, China alone is expected to account for 42 percent of all Internet use in the Asian Pacific region. By joining other APEC economies in the ITA, it will bring more positive change for citizens in every country of the Pacific Rim.
I am pleased to announce that we are celebrating our 20th anniversary in China by launching a major software development center here in Shanghai next month. The center will work together with our partners here in China to develop software for the worldwide market and find application solutions for the domestic enterprise market. We're especially pleased that the project will create another 1,500 jobs for software professionals in Shanghai.
A few months ago, when I was invited to speak here, I planned to come and make the case that the next global economic upturn will be enabled by a whole new generation of information technology. I was going to talk about how that new wave of technology will empower customers - transforming the ways we do business, creating value and revolutionizing entire industries. And I certainly intended to talk about the responsibility of leaders in shaping a world in which technology and its benefits are accessible to all. I think these are still worthy topics of discussion.
But of course we don't live in the same world as we did five weeks ago. It's been said that if the millennium marked a moment in time, the events of September 11 marked a turning point in history.
I come to you from a nation in mourning. As we meet here today, rescue workers in New York and Washington, D.C., are still digging through the rubble to find the remains of those who are missing. Like yours, my heart still aches for all the mothers and fathers, brothers and sisters, sons and daughters and friends who are still waiting for answers, whose lives will never be the same. My country is now experiencing a sense of insecurity that citizens in the Middle East and Northern Ireland have known for decades.
Of course, this wasn't just an attack against America. This was an attack against the entire civilized world. As we all know too well, more than 80 nations - including many of the nations represented here today - lost somebody in those brutal attacks. All of us are feeling more uncertain than we did five weeks ago. While we may be more anxious than we have ever been, we are also more united than we have ever been.
If it's even appropriate to suggest a silver lining in this darkest of dark clouds that has fallen over our world the past five weeks, I think it is the renewed sense of community - the renewed sense of purpose - that we have seen across the globe. I think all of us understand that winning the war against terror will be one of the great challenges of our age. It is possible if we stay united, but impossible if we are divided.
We are all in this together. We will all do better together. This is not just a nice idea - it is the defining feature of our age. And it should guide us not only in the fight against terror, it should guide us as we work to fulfill the promise of the knowledge economy and the age of globalization in the only way that will be sustainable - by making its benefits available to as many people as possible.
I believe the task before all of us - as America and its allies pursue terrorists and their support systems - is not simply the punishment of the guilty. It is that, in the wake of these unspeakable acts, there should emerge lasting good. And that's what I would like to talk with you about today.
Some of this week's agenda has changed in order for APEC governments to be able to discuss and address these challenges. How can we - the economies of APEC and its business leaders - use technology and share information to make our defenses better?
There are many vitally important and immediate questions, all deserving of lengthy discussion and action. But in searching for solutions that we can all share, I think it's just as important at this time to search for a meaning that we can all share.
For much of the past century, most of the globe saw the world through what can only be described as "zero-sum" glasses. There was a belief that for one nation to win, another nation had to lose. For one region to move ahead, another region had to fall behind. For me to do well, you had to do badly.
It's especially tempting perhaps for a CEO to think that way - since business, despite the new partnerships and synergies we all seek to establish, can be seen as a zero-sum game. A customer will buy a printer either from you or from me. In that simple transaction, you have to lose for me to win. And my market share comes only at the expense of your market share, if we're making similar products or providing similar services. But broadly speaking, we all do well when the economy does well. Competition makes us stronger and more capable. And increasingly, ecosystems are being formed by companies to provide value they cannot provide alone. Increasingly companies and countries are all in this together.
In those countries and regions where there is conflict, zero-sum thinking prevails. They define their victory by another's defeat. So they stake all their energy and creativity on making their neighbor lose, instead of finding ways that all can win.
Among APEC nations, we have made a different choice. We have found a meaning we can all share. Over the past decade, this organization has played a crucial role in helping its member economies realize that our success as leaders and organizations is increasingly defined by our ability to see how our organizations fit into a much larger ecosystem of causes and effects - how the push and tug of an action on one side of the globe can positively or negatively affect families, companies, nations and entire people on the other side.
Particularly after the hard economic times of 1997 and 1998, and indeed the hard economic times of 2001, we all know that we have a stake in each other's success. We should have no interest in pitting one part of the region or one trading bloc against another. In this new era of global interdependence, the old zero-sum game simply doesn't work anymore. I think the economies of APEC have realized that in order for me to win, you don't have to lose. We can both win. If we work together, we can expand the forces and reach a positive interdependence while shrinking the impact of negative interdependence.
All of us depend upon continually expanding markets for our economies to grow. If half the people of the world are still living on two dollars a day 10 years from now - as they are today - can we continue to grow at rates we need to? Information technology has proven that it can accelerate progress in the developing world. But will it if Internet penetration remains at just 4 percent among the 13 most underserved countries in APEC?
A WORLD OF CHANGE
In some ways, I believe September 11 marks the beginning of a new era of leadership, one in which corporations can and must take an even greater responsibility.
Corporate leaders, now more than ever, have an opportunity to redefine the role of the corporation on a world stage - and to leverage our ability to improve the lives of individuals, companies, communities and nations - for the better. We have a chance and an imperative to improve the choices, economic condition and sphere of opportunity for billions more people in the Asia-Pacific Rim - and around the globe. It's a greater mandate - one that our customers increasingly demand of us, one that is deserved by every country in which we do business and one that must be undertaken because it can be.
Many of you know that I've studied European medieval history. What drew me to the subject was a curiosity about what triggered the transformation from the medieval era to the Renaissance, what caused the shift from medieval thinking to enlightened thinking; what sparked centuries of sustained and enduring human achievement.
When Galileo, Copernicus and Levenholt turned the theory of an earth-centered universe on its head - they forced people to rethink religion, politics, art, commerce and individual responsibility. Hundreds of years of parochial thinking gave way to curiosity and possibilities.
But the new thinking that defined the Renaissance was not without its opponents. Just look at the case of the Italian philosopher, astronomer and mathematician Galileo. You may remember that Aristotle held the view, essentially, that an object 20 times heavier than another, will fall 20 times faster than the other. That view prevailed for nearly 2000 years because from 300 BC to 1600 AD apparently no one ever accidentally dropped an apple and an olive at the same time. Then around 1590, Galileo went to the top of the leaning tower of Pisa, dropped objects and disproved Aristotle.
Almost as soon as he set foot again on the ground, he was stripped of his position as chair of mathematics at the University of Pisa. His church forced him to recant his views that the planets revolved around the sun and not the Earth. He was eventually sentenced to life imprisonment for suspected heresy - by those who felt most threatened by the changing ideas they saw around them.
Galileo aside, only when merchants and business owners stepped up and played a crucial role as a countervailing force to the critics - taking the inventions and innovations of the Renaissance and making them relevant for thousands of citizens - did the Renaissance reach its full flower.
I think there is a reason for that. During times of great change, people cling more tightly than ever to their version of the truth, because they fear that their beliefs, their authority, their culture, their sense of certainty and their way of life are going to be diminished. So they do all in their power to challenge these new ideas, and try to undercut it. The church was threatened by Galileo because if the sun was the center of the universe, then it meant that God - and his earthly creation - were not. If that was true, what did it mean to the authority of the church? It was only when people found a share meaning in their lives; only when people saw the positive benefits that these discoveries brought to their lives - like the telescope, which improved mariners' ability to steer by the stars - only then, were people willing to put aside their fears and anxieties.
THE DIGITAL RENAISSANCE
The same is true today. This is an era when technology is liberating the imagination and removing barriers. I would argue that we are at the beginning of a new Renaissance, the Digital Renaissance. Once again, millions of ideas are coming to fruition and inventions are coming to market. But the steady march of globalization and information technology that is creating prosperity and progress for millions won't have lasting value if billions feel like they have no stake in it at all.
The protesters we saw in Genoa and Seattle, along with less fortunate people in many parts of the world, see the changes brought by increased globalization, but they don't understand them, and they fear they will be either marginalized or left behind. At a time when more than a billion people still live on a dollar a day, it's not hard to understand why they were afraid. So they lash out.
Just as the European Renaissance proved, it's only when people across the world start to see these new discoveries making an impact in their lives - in better jobs, education, health care, quality of life, better opportunities, cultural preservation - will this latest Renaissance have answered its critics and dispelled the opposition.
Like the Renaissance, the opponents of progress can only win if they make us do less than we once did to live out our dreams. We cannot let fear - of economic uncertainty or the threat of terrorism - stop this new era and humanity from reaching its full potential. To those who would fear the changing world, who would try to stop our forward progress by making us afraid, our response cannot simply be to be unafraid. Our response must be to show the people whose hatred is inspired by fear why there is no reason to fear.
In the transformation from the medieval era to the Renaissance, it was not innovation alone that represented the greatest shift - it was belief in human potential. I believe the more we - as leaders of government and corporations in this second Renaissance - invest in unlocking human potential, the more we will counter that fear and reduce poverty in those places where terrorists find their newest recruits.
APEC's growing work in the area of human resource development and capacity building aimed at improving the region's standard of living and preparing its member citizens to take advantage of globalization and economic integration is extremely valuable. It helps reduce the anxiety and fear, and raise hopes about the future, that will serve us all. Governments will have a hand in bringing this about, but businesses will have a critical role to play as well.
I honestly believe that the winning companies of this century will be those who prove with their actions that they can be profitable and increase social value - companies that both do well and do good. In fact, business leaders will no longer view doing well and doing good as separate pursuits, but one unified pursuit.
And increasingly, shareowners, customers, partners and employees are going to vote with their feet - rewarding those companies that fuel social change through business. The companies that will be worthy of their investment, money, time and energy will be those with similar values and those that can meet a much higher standard of performance. This has nothing to do with politics or subscribing to the particular ideology or economic theory. This is simply the new reality of business - one that we should and must embrace.
Despite these difficult times, I think it would be foolish for any of us - as individuals, as heads of corporations, as public-spirited leaders - to underestimate the growth potential as well as the long-term implications of the Information Revolution.
All of us are trying to ignite the growth engines inside our companies and to help re-ignite the world economy as a whole. But we all know it's not possible to cost-cut our way to growth. Growth is dependent on new revenues - one, three, five and 10 years down the line. In a business environment characterized by increasing globalization, we at HP and other companies, consider it a necessity to explore business opportunities in regions that comprise the majority, two-thirds, of the world's population.
As you know, economic growth rates for the developing countries over the next three years are forecast by the World Bank to be anywhere from 1.5 to 2 times that of the Organization for Economic Cooperation and Development countries. As of last year, spending on information technology in emerging market economies was growing at twice the rate in the industrialized world.
That's one of the reasons why the work of APEC has been so important. It's no accident that per capita GDP in East Asia has doubled since 1990 - or that incomes among lower-income economies in APEC have grown by 60 percent in the past decade. The work APEC has done the past eight years to establish improved policy and regulatory frameworks for economic growth has reinvigorated free and open trade, and laid the foundation for sustainable growth.
We also welcome the APEC report on trade liberalization within APEC, particularly as it relates to services and e-commerce-related trade. The work many of us have done together through the Shanghai Port Project is a good example of the positive change, cooperation between governments and the private sector.
And we especially welcome the APEC report on E-APEC of the E-Commerce Task Force. This report addresses some of the very things I have spoken about - leveraging the Internet and IT technologies for development, capacity building, giving more citizens a stake in the future. These will be essential for the future economic prospects of the region.
We also welcome the discussion and progress in APEC to develop policy and program ideas to increase consumer and business confidence in doing business online. Hewlett-Packard has been active on a number of fronts to advance these objectives. We've worked through the Global Business Dialogue on E-Commerce to develop global business consensus guidelines on trustmarks, dispute resolution and data privacy. We look forward to working with APEC governments to develop their programs in the coming year.
The more we can share best practices across the board, the more we will build confidence and capacity. While cooperation is important, leadership in the knowledge economy also requires us to take action on our own.
BRIDGING THE DIVIDE
While debates over the digital divide are important, perhaps you've found some of them divorced from the day-to-day realities of running your business. We have found that there are ways to bridge the digital divide in a way that presents real opportunities for new business. Let me give you my perspective and some examples.
A year ago this week, we announced something we call World e-Inclusion. It is an effort designed to spread the benefits of the digital world into areas that have been excluded up until now. To towns and villages and businesses everywhere, to the 4 billion people who have - up to now - not had the tools to share their invention with the rest of the world, and who have every right to participate in a knowledge economy. It's not about recycling PCs or imposing Western technology on developing nations. It's inherently about creating, from the ground up, locally sustainable solutions that are culturally relevant. It's about rethinking how technology can empower, sustain and liberate, rather than exclude, erode and restrain.
Just a few examples: In Central America, HP has entered into a strategic cooperation agreement with the Foundation for Sustainable Development to develop and implement telecenters for villages in remote areas without traditional infrastructure.
In Senegal, we are partnering with Joko Inc. to develop community technology centers in low-income urban and rural areas.
In India, we are working with EID Parry, a confectionary business that is seeking to become the lowest-cost producer of sugar by maximizing sugar cane yields of local farmers.
In Brazil, we are working with McDonald's to install computer centers in several franchises across the country. McDonald's is interested in providing additional services to local communities, including people who are not currently buying their food.
And similarly, in Western China, we are providing equipment to grade schools, two of which were learning about computers by reading about them in textbooks. This e-learning program will serve thousands of students a year - and in the process, gives them the skills they need to grow and helps us build the markets we need to grow.
We have done work in schools in Africa where the chemistry lab had no equipment - no beakers, no chemicals, nothing - just empty desks. Teachers would draw pictures on the board of what a chemical reaction was supposed to look like. But if you walked down the hall to the computer lab, you could find students who found a chemistry website, and they were developing a chemistry experiment online. They were enabled. The more we can bring this technology to the most remote parts of the developing world, the quicker we can deliver a world of information that they wouldn't otherwise have access to.
It's possible to make an argument that when people don't have safe drinking water and basic health care, they shouldn't be worried about Internet connections. But we believe it is a false choice, because information technology offers us opportunities that we never had before to "leapfrog" aspects of development.
We consider World e-Inclusion to be a long-term strategic investment in advancing HP's global competitiveness. With a market measured in grossest terms at 4 billion people, each source of revenue can produce a significant stream for HP and our partners, most of whom we expect to be regional entrepreneurs and local entrepreneurs. It's a chance to do well while doing good at the same time.
That's in keeping with something that Bill Hewlett and Dave Packard understood when they started HP 62 years ago. These two young guys with $538 between them simply wanted to invent what they called the useful and the significant - useful in people's lives, and contributing to the world in a significant way. They wanted to create a meritocracy - where personal, everyday acts of leadership counted.
That's the same kind of thinking they wanted to adopt in China when HP began there 20 years ago. But this isn't a lesson we brought to China - it is a lesson we learned from China. I think the remarkable history of our gracious hosts foretells a great future.
In the 1400s, European colonialists in the days before the Italian Renaissance sailed the world in armed ships, took slaves, staples and luxuries, and forced Christianity on local peoples. During the same period, at the dawn of the Ming Dynasty, Chinese ships - led by a Muslim named Cheng Ho - sailed in the largest vessels ever seen to places like Java, Sumatra, Ceylon, Brunei, Mogadishu and Mecca. They came unarmed, took nothing, brought gifts and praised local religions.
In the town of Galle on the southwestern coast of Ceylon, there is an inscription left by Cheng Ho in Chinese, Tamil and Persian.
The Chinese expected nothing from other nations except their respect, alliance and continued development. Some might say that the Chinese of the 1400s, who surely practiced the view that it is better to give then receive, may have taken their generosity too far. But when we consider China of six centuries ago, we see the promise of China's future. For today's China draws on the same skills, industry, talent and traditions that made China great in the past. But today's China has even more than that. In what may well be seen by historians as a great turning point in the unity of nations, China has made the choice to share its talents and ideas with the world - and enrich China with the insights of others.
We all have that chance. APEC member economies and business leaders can learn from the past and from each other to build the greatest civilization in history - one that has no boundaries and excludes no one. It will be built on the belief that it is important to give, vital to receive and essential to include, because everyone has something to give, everyone has something they can stand to gain and everyone does better as part of the whole.
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