Manuel Vexler
Again, I have to stress this is not a discussion about companies not being profitable. It's a discussion about including the human factor including the sustainability, the resilience into the profit profitability equation.

Jeff Ma
Hello, and welcome to love as a business strategy, podcast that brings humanity to the workplace. We're here to talk about business. But we want to tackle topics that most business leaders shy away from, we believe that humanity and love should be at the center of every successful business. I'm your host, Jeff Ma. And as always, I want to have conversations with real people and hear about real passions, and businesses, and practices. And today I have the executive director of AKFI, which is Actionable Knowledge Foundational Institute, a nonprofit bridging the divide between digital transformation, and ESG. He's also a facilitator instructor at Cornell for sustainability, digital transformation, innovation and 5g. Please welcome to the show, Manuel, Vexilar how's it going, Manuel?

Manuel Vexler
going fine, Jeff, and very glad to be on the show. And looking forward to solve some, some issues of how we connect, how we connect purpose, how economic life, how we connect businesses that really care about people.

Jeff Ma
Yeah, and my favorite type of episode is when it's not immediately apparent, how this is all going to tie together. Because it might not be right on its surface, digital transformation, or sustainability and all these things very specific in your field. And over here, I'm, I'm, I'm interested in love and culture and all these other things. So I'm excited, I'm excited to have this talk.

Manuel Vexler
Very excited to and really, if we start with sustainability, sustainability has what they call it, sometimes the triple bottom line. So profits were always the focus of enterprises. And I don't think we need to bring this forward today. The other two parts are social, the stakeholders in particular, not only the shareholders, which are looking after profitability. But the stakeholders, which include actually the community, including employees include the impact on on the society in general, and the environmental, which is also a very important topic today. So if we focus on social actually, it is very interesting to see that very recently, actually, we had a very interesting experience, AKFI, the Actionable Knowledge Foundational Institute is where we're talking about sustainability. And the inventor of industry 5.0, which very few people heard about it, came and said, we are really interested to talk with you. And we did, we did a talk show together. In the industry 5.0 Its human centric. So when I started to look at the book, is it very clear that the humanity has to take back the central role. What I'm saying is the following industry 1.0 2.0 3.0 4.0 They were technology driven, the steam engine, the electricity, the computer, in the venture, artificial intelligence, IoT, and all these beautiful technologies metaphors coming up soon. All these technologies are technologies and humans are using them and they benefit some benefit actually, some don't have as this technology create also big social displacements. But now, the Board of Directors the the C suite, the executives have to reconsider how they look at their business, and they have to go back to the human centric model and to an environmental centric model.

Jeff Ma
I have about 20,000 questions in my head already ready for this? I want to but I want to make sure I want to, I want to get through a couple of things and do it the right way. So a couple things I want to I want to hear more about you first. And I'll get to that. And then I also want to help the audience define a couple of terms, by your definition, just so that we can all be on the same page. And then I want to come back to all this sustainability, and industry and all this stuff. So if you don't mind? I'd love to first make sure we get you personally, Manuel. What's What's your story? And where does your passion come from?

Manuel Vexler
Sure. First, my my story is you opened with in the opening remarks, I, I'm very focused on two activities. One is related to university. It's related to adult education, to continuing education in the space of new technologies and sustainability, new technologies are things like 5g, IoT, artificial intelligence, sustainability, it's about ESG, it's about creating new business models that mix technologies with environmental and social. So this is me. My passion comes, if I go really deep in, in my personal history, I'm a different engineer, I started and I worked. My career in engineering. However, first thing, I'm a medical engineer, I'm a biomedical. Humans, we're all always in, in my focus and in the first year of university, I wanted actually to quit and go to medical school. So really, human it's, it's something that I'm passionate about from, let's say day 1. And as I work in corporations, major corporations, I really realize that it's much easier to manage technologies, it's much easier to build technologies, than it's really to put the human in, in the center to think from the perspective of people, the perspective of the employees, the perspective of the shareholders. So this is my story. This is from day one, and now going to some definitions, as we wanted to mention, I'll mention terms like sustainability, and sustainability, it's a very broad term, we can put, we can spend the rest of the day adding adjectives to sustainability, sustainable business, sustainable agriculture, sustainable humanity itself. But really sustainability from a corporate viewpoint from a board of directors viewpoint has to center on three, what they call it the triple bottom line on three very important and equal functions of the enterprise today. And these functions are social, or are also environmental. And of course, our economic enterprise are economic. Human enterprises are economic factors from day one. And for 50 years, since Milton Friedman stated the the unique purpose of enterprise it's to serve shareholders, the shareholder primacy, so that was the only guidance for a board of directors, their fiduciary responsibility, their personal responsibility was who are the investors. That change in the last 10 years and this is about sustainability. So today, when I'm using sustainability, I'm using the definition of the triple bottom line.

The other one we need to go through is the definition of ESG and ESG, as many of of the listeners I'm sure they know, it's about environmental, social and governance. So now if we put together the two, we can see a much more complete picture of the enterprise and how the enterprise can act socially. How the governance can act. So this is I'll go back to ESG. In a second, I would like to add the third element, which is digital transformation. And there is a lot of confusion between digitalization the process of using digital technology and digital transformation, because digital transformation is business model transformation, it is social, you have to retrain your rescale your employees and you impact the environment around you. And it is, it is, of course, the technology, right? We talk about artificial intelligence, IoT, flying drones, self driving cars, and so on. So we have three definitions now, sustainability ESG, in digital transformation, when we look at ESG, I want to dwell a little bit more into it. And they have an outside view to all the enterprise, how the world looks at ESG. And that's primarily investors and insurance companies, right, which are looking at ESG is a measurement of how well the companies prepare for survivability is prepared for longevity, prepared for resilience. So it's a measurement of resilience if you want in a simple way, right, lower risk, better governance, better care of the environment, better relations with the ecosystem, the stakeholders. On the other hand, if you look from inside out, it's a how to do if you want for the boards of directors, and for the executives how to behave socially with their company, how to behave to our employees, diversity, diversity in the Board of Directors diversity in the enterprise, in how to behave. So it is a code for a better business. And this is where I think the book comes in because love, love of the understanding of humanity. It's it's becoming a unavoidable area for the boards of directors and for the executives to consider, it cannot be left behind. Some companies try today to do something which is called greenwashing. Sooner or later this will stop. One of the reason is regulators are getting now in the case of companies doing greenwashing Securities and Exchange Commission, for instance, it's looking at disclosing greenhouse gases by companies. So ESG is both a look from outside the how the investments flow to all these companies that are better managed and more environmentally conscious. And of course, how they manage their employees, the relationship with their customers, and from inside out how the I'm hesitant to use the word behavior, but really how executives have to behave, it's a behavior. It's a code of behavior, or code of good behavior.

Jeff Ma
I'm not hesitant to use that word at all. And I think that's one of my favorite words. I'm glad you went there. Obviously, from from my perspective, from love as a business strategy, I'm starting to see the connective tissue and in it's really interesting to think about ESG and sustainability from both of those outside in and inside out perspectives. Because we we kind of, don't go into that, that space, of of, you know, the actual policies, the actual governance of those things. But what I what I do see is what, where we talk about just resilience, and I think resilience is in our kind of subtitle of the book. And it's also something that we talk about quite a bit when it comes to being able to tie your behaviors to the actual business outcomes that that every business should be looking at. And when we say resilience, we really come at it from a high performing team perspective. But if you think of a business as nothing more than a large, high performing team, or a combination of many high performing teams, you come to the realization that it is all connected, the resilience needs to be there from a people and behavior standpoint, in order to be successful in the process changes in the tool changes in the digital transformation that many companies seek. So I hear I hear all the thing like all the things that you've just defined for us are things that I've seen, many businesses try to tackle without regard for the people elements, whether you call it love, or just culture, but also more specifically resilience and sustainability from the from the social side, and then you you face challenges, right you face, you're not able to actually succeed.

Manuel Vexler
You if we think of maximization, and what companies were doing in the past was the maximize the profitability in the short term, to the point of companies even, you know, crossing the legal limit, and then the was fraud, but trying to really focus only on a single element, which is short term profitability. Yeah. And if you take a short term profitability approach, of course, you don't care about your employees, you don't care about your assets are the assets, right? You push your machines to the limit, you don't maintain them, because it's costly. And the same with humans, right. But if you want the resilience, if you want to pick winners in the resilience, you have to look at what I define as the digital transformation, for instance, which is the latest transformation process and the transformation processes I define it is not solely technology, 70 to 80% of companies fail, because they introduce technology. And they say okay, no, I bought cloud. And I cannot pay back my investment. Because I didn't train my people, I didn't inform them. People are concerned about their jobs. People feel, you know, a second class citizen in the company, because the machine takes over AI, it's, it's more right than you. So So of course, the resilience goes down in this in this process. So people are not brought on board. New business models are sort of dumped on the company, and platform business models, I'm sure your company is very much into that. Automation, but it doesn't look at the human aspect. How you retrain your how you rescale your people how how you use them for more fulfilling jobs. Many people hate to do data entry, I'm one of them, just, you know, entering data, this is not the human job. But if nobody tells me and I'm a data entry person, I will I'll really be scared about my mortgage, and my loans.

Jeff Ma
Yeah, and for me, underlying underpinning, all of that is also that any type of major change that you're trying to go through, requires a certain amount of trust and relationship amongst the people who are going through it together. And I think too many too many times, even if a lot of businesses have considered themselves successful in their planning, when they say, Okay, we want to take on this new digital transformation. So you know, we're gonna go Agile, and we're gonna bring in trainers for the right process. And we're gonna bring in all the best kind of kind of preparation in terms of, and that's great. And it's all there. And they think they're thinking of the people, because they're trying to get people like people prepared. But they kind of miss out that a lot of the people are still wondering why, or what's in it for me, or just don't trust their boss, and they just don't trust the organization, the people around them. And I think when you don't have those core pieces, all those other things kind of fall flat because people aren't listening people aren't actually bought into this change. And and no amount of process is actually going to fix that.

Manuel Vexler
Absolutely. I'll touch on two points. One clear example is M&A's mergers and acquisitions. And this is an extreme example, because especially companies during an M&A process and I was involved at Cisco in M&A, they started with a very, very small group, there are regulatory there are legal implications when you start this process you cannot involve the whole company. So the trust in the executives during this process has to be very large and the ability of these executives to come out and communicate and explain why this was done in secrecy. Not just say okay, from tomorrow you you have a Cisco badge or or a Microsoft badge or a Amazon badge. That's not enough. It's not answering any question. This is a process right? Do you have a different batch? So So M&A is one clear example of that. But come in any manual in any book in any article you find out. And we have problems with communications. And what the problem is communication starts is with an open door, we stressed if you don't trust what I'm saying, if you don't think that I am Manuel Vexler, um, there's no human relationship between us. Yeah, I may be an avatar or maybe somebody else.

Jeff Ma
Yeah, and I think too often, communication efforts about these big rollouts are so focused on like the content. And in some cases, they're being completely transparent. They're being completely honest to be, like, the factual kind of things they're sharing sure is real. And yet, what you see is that it's how you communicate it, it's how you connect

Manuel Vexler
human is this trust, and I meant which it doesn't come from a fact sheet or from a from a expense, not an expense, a financial report, you know, we did fantastic, we improved our ROI by 5%. And this and that, you guys are great. Is this the right communication for a human? Yeah, how many people really care about the finance, they care more about knowing they work together, they care about their family, right outside the outside side of the inside circle, they care about colleagues, because how many times these communications are made, and then you hear, and by the way, we have to reduce our workforce by 10%. That, of course, you know, people trust the last message, not the first.

Jeff Ma
And this is why I loved that you just say behaviors, or you use behaviors, because when you think about it, that is the how, right, like how you communicate is nothing but your behavior. And it can be as simple as that. But it's also as complicated as that, because with all the right intents and all the right, you know, like what you would consider the right mindset, sometimes going into this, you'll still see struggles because of how we actually communicate how we come across, as as leading leaders of change.

Manuel Vexler
I'll give you an image, you reminded me about a case. This is a company that went bankrupt one of the largest Canadian companies in telecom. And we had the very dictator like, executive and was a big inauguration, they brought us by bosses to a big place. And there are these two presidents, the president of R&D and the president of the company, and they have to cut the cake. And the President of R&D holds a really large knife. And he tells the president of the company, I'm not going to give you the knife, because you're going to cut. What do you think was the message? Well, the company went bankrupt. So we know what the message was, the company was going the wrong way. This is in front of, you know, major employee meeting.

Jeff Ma
Well, I want to I want to have time to talk a little bit about industry 4.0 to 5.0 or just this transition, because I find that very interesting, can you I know you already gave a bit of a primer to it in the beginning, but can you talk about what is industry four and five and like kind of give us your primer on that please?

Manuel Vexler
We tend again to talk about the industries in terms of technologies, but each technology brings a major major social change and environmental change. I would I would think that the destroying much more rapidly the environment today is the industries are growing. Although there are supposedly cleaner we use electricity not steam from the steam engines in industry 2.0 . But industry 5.0 has two elements and the element the tent of industry 5.0 of the advocate the father of industry 5.0, its wasteless. human centric enterprise, there is a human centric part. But it's also the the fact that we design and the manufacture for waste. So if we start to think, again, if we made our make our people as executives to think, how to design without waste, it will be a cleaner and much faster environment. This idea had been picked up by the European community they see, which is now issuing a number of policies. And as any good idea gets a little bit transformed by policies in implementations and so on regulations. But there is an industry 5.0 effort inside the European community to to address the issues of sustainability and resilience. And it's human centric, this industry is no longer about using computers or using machines, it's about us asking humans to behave in a certain way, collectively, when they design when they manufacture, when they transport when they distribute when they sell when they use.

Jeff Ma
I'm so drawn to this, this 5.0 Because, you know, as I said, the beginning the show, our entire mission with love as a business strategy is to bring humanity back to the workplace. And it's it's almost this direct of space that connects because the workplace hasn't been nothing more than how the industries have evolved along with it. Right? The workplace has it is the industry. And so to see that, as technology, you would think that each iteration would just be more and more technology more and more aggressive, more and more greed, it is so refreshing to see that the next evolution is trying to bring it back, if you will, or bring it, you know, into the space that tries to correct kind of the wrongs of were the misguided kind of path that we've been on. And so I find that really, really, really exciting.

Manuel Vexler
I think, you're absolutely right. And I think people have different views or how far we push or can still push the environment, we face a big transition, because all the New Energy Renewables and so on, for instance, or require the humans to take a deep understanding of why it has to happen. It is about the future is the future of the future generations is the is the generations of our children and grandchildren. It's an effort that very few people will have accept without a deep understanding of why it needs to happen. Yes. And yes, it has to start with the enterprise because especially industrial societies, which it's a large portion of large part of the world, and by industrial I include also agriculture, because culture becomes more industrial. So if you look at the economics, the people have to take control back from the technology and have to have a deeper understanding how to use it, not only to measure on a profit, right and again, I have to stress this is not a discussion about companies not being profitable. It's a discussion about including the human factor including the sustainability, the resilience into the profit profitability equation. I'll give you an example about 5.0 Because that was a discussion I had with with the inventor of this fabulous zero wasteless our equations our economic equations, profit and loss, profitability and so on, have two factors, the cost of resources, humans and materials and the value of the sale. what we end up with sales, but if you start to subtract the waste, if you have to add the waste, you subtract the waste from the inputs in this equation Do you end up with a better profitability? Because people think better, people will feel better about it is not about cutting, you know, the, our meals in half and eat less, or, you know, watching less movies, it's about thinking, you know, different.

Jeff Ma
That makes a lot of sense. I love that. We're just we're coming up to the end here. So I want to make sure that I leave the audience. Also with kind of a, what should we do? You know, kind of like, if we hear this, I'm hearing that, you know, one of my missions with every episode here is to get people to look at work in the world and themselves differently, right? Change a mindset or two. With each episode, hopefully, someone listening can have an aha moment and shift their mindset around how they view work, how they view their colleagues, or how they view business. And so, I want to just open up that space for you to help show the audience what what can we change in their minds today, or what should they do about it?

Manuel Vexler
I would go and talk about two things, the individual mind in the collective mind. And clearly executives have a role model in the collective mind. So changing the collective mind cannot come, okay, it can come from some individuals inside a group. But it has to be sanctioned, it has to be motivated, it has to be approved if you want, by the top, because we are still in heirarchical society, regardless from flat we think it is. Now the individual mind is really education. It's understanding that in a modern society, we cannot stop with a degree or before a degree and never go back to learn. I didn't say school, I said learn. Learning, curiosity has to be part of our mindset. If we want to discover how we can balance this, this sustainability model that I mentioned before, which is profitability, which is related to the welfare of people with also social and, environmental responsibilities, and I think we can do it, we were very good at solving problems. Now, as I stayed started. I'm an engineer. So engineers, we give them a problem, they will eventually solve it. So the solution is not in one place. It's in the leadership. And it is in the people. You cannot have only half and hope that transformation will happen.

Jeff Ma
I agree. 100%. Manuel, thank you so much for your insights in sharing kind of this really important conversation and really insightful look into sustainability in the industry. Thank you so much for sharing that with us today.

Manuel Vexler
Jeff, appreciate it and hope we'll meet again soon.

Jeff Ma
Absolutely. And to our listeners. Thank you so much for loyally listening along. As you know, we release every episode every week, new episodes and if you have not already of course please check out our book Love as a Business Strategy with that. Thank you Manuel, and thank you to everybody.