Jürgen Hambrecht: There is one single thing which is missing at this very moment. And this is a sense of solidarity on this earth. Cooperation and collaboration is much, much better than protectionistic approaches.
Paul Laudicina: I’m Paul Laudicina, chairman emeritus of Kearney and founder of the Global Business Policy Council, and this is “Coronavirus: a world transformed.”
We’re recording on Thursday, April 9.
Before we begin our discussion with this week’s distinguished guest, Dr. Jürgen Hambrecht, I’d like to reflect a bit on some of the major developments of this past week. We all know that global infection rates have increased fairly dramatically, much as forecast, driven largely by the spike in incidences in the US, even as we see a flattening of the incidence curve in hard-hit countries like Italy and Spain and some of the hotspots in the US. The good news is that it appears some countries hit hard earlier by COVID-19, like China and South Korea, are slowly beginning to resume the status quo ante. At the same time, developing regions of the world brace for what could be a devastating impact given, among other things, the fragility of their healthcare systems, infrastructure, and economies.
The economic fall-out from the coronavirus this past week has been grim, as reflected in our updated Kearney Global Economic Outlook, which we are revising every two weeks to reflect current performance data. We see, for example, cratering GDP rates. Germany’s economy, for example, will shrink by double the size of the decline it experienced in the worst of the 2008 financial crisis. What’s more, unemployment figures globally are surging, in many cases also to levels never before experienced. US unemployment rolls, for example, threaten to exceed even those of the Great Depression. The International Labour Organization reports that 81 percent of the global workforce of 3.3 billion workers are currently affected in some way by full or partial shutdowns imposed worldwide.
So we begin today’s discussion with ample evidence that the pain and suffering of this pandemic has metastasized, while some glimmers of hope are emerging that the stringent policies put in place to contain the virus are beginning to show positive results. We can only hope that this progress will continue as we all struggle to get a grip on the impact of this contagion.
I’m grateful to welcome today Dr. Jürgen Hambrecht. Jürgen has spent more than three decades at the world’s largest global chemical company, BASF, during which time I had the good fortune to get to know and watch closely his passionate, purposeful, and principled leadership. Jürgen currently serves as chairman of the BASF supervisory board.
In this interview, which has been edited and condensed, you’ll hear Jürgen share his perspective on the massive global challenge we’re facing and a look at how the virus will affect the economies and governments of China, Russia, and emerging markets. And Jürgen gives us an inspirational charge: to find the opportunities for innovation in the wake of a crisis.
Interview with guest
Paul Laudicina: Jürgen, welcome. Thanks very much for joining me today.
I remember your active participation in our meetings, and then 2007, in fact, you headlined a rather farsighted session at the time titled “How to save our planet” where we discussed many of the already stressed biosphere issues that we’d have to cope with in the coming decade. So you’ve been thinking through with us as a farsighted CEO, engaged not just in the world of the private sector, but also in many of the important public policy issues of the day. Tell us a little bit about how you might compare this crisis that we’re in the midst of with other crises that you’ve managed through over the years and the kinds of lessons that we may have learned that could be useful to help lead with today.
Jürgen Hambrecht: Paul, thanks for joining me in difficult times here.
I have to say I have not seen any kind of a crisis like this. This is the most, probably, the biggest most demanding test for human mankind I can think of, and I was born after the Second World War. I have seen destroyed cities going to school, which is mind-boggling still for me in my mind, but what I see now is a totally different thing.
And financial crisis if so, to compare, this was the most severe I have seen before, and I went through six or seven crisis recessions. Financial crisis, by the way, GDP in Germany was down almost 6 percent in 2009, but we have come back with a V-shaped recovery rather quickly.
In this crisis, I think this is very different because for the first time ever, we have the same cause. There is no limitation. Everywhere in the world, the same thing. And we have the one single thing: life and health of people is endangered. And this is a totally different story. So I personally believe there is a need for a global crisis management, and unfortunately, we see this only to a small extent.
Paul Laudicina: There has been a lot written and spoken about how this crisis will impact global integration, or as we in Kearney call it, islandization. So think a little bit through again, to the future about how you believe this pandemic might impact the extent to which there’s global connectivity.
Jürgen Hambrecht: At this very moment, China is learning in front of the rest. Let aside let me say is the transparency and the reporting China has done one can say this was cheating, whatever. Anyhow, I would say the statistics today are relatively accurate. And China is helping the rest of the world at this very moment. Medical equipment, protection clothes, what have you, and this advice, sending, for example, doctors to Italy and other places. So this emotional piece certainly will help China to become a respectable partner going forward.
Whereas on the other side, there is some kind of a protectionistic approach, especially from the US, but also other countries where one has to ask the question: is there enough empathy for the rest of the world? And just looking into Africa, we are Chinese relatively active and along the Silk Road China’s relatively active, I would say this emotional piece today will have a major impact on not globalization—regionalization, which is expanding the Chinese hemisphere more than the Western hemisphere will be able to get.
Paul Laudicina: What about big government? I mean, you need obviously and the world saw how successfully, how aggressively, the Chinese were able to get a grip on the transmission of the disease initially in Wuhan and then broadly, to some obvious, positive effect on stemming the transmission rate and the ultimate impact. What about the kind of government that might be required after the crisis and whether or not big government will easily fade? And in particular, the kind of big government that we saw from China, quite different from the kind of government response that we’ve seen elsewhere.
Jürgen Hambrecht: We have also a big change towards very powerful government, let me say in an increase in state power, without having the time to debate about it. So this is partially protectionistic, can be nationalistic, with tendencies which will support certainly, a state of emergency. And Big Brother is contact-tracing you, for example, also here in the Western Hemisphere.
This could certainly lead to a new ideology as we go forward with radical changes concerning free market economy. And I think here we need to be careful, specifically coming back to China in a second, especially here in our free democracy. Very difficult from my aspect, to turn this wheel back. We need therefore rules with clearly defined sunset clauses to avoid the overmighty state with growing bureaucracy and intensive spending. As I said, I think pandemic government is not fit for everyday life. We need to get back to normal.
Now, back to China. China is a totally different system. And I have to say, despite the fact that we had this vigorous attempts in Hong Kong, to put question marks behind the system, this pandemic crisis has helped the existing leaders to really show their leadership, and people are happy, but they have acted as they acted.
This will, certainly, this kind of very straightforward leadership is something we have to watch from our side very carefully because usually, we constantly debate about individual steps and finally come to a conclusion. More immediate action is needed in this kind of crisis. And therefore, from my perspective, China will not be weakened. China will be strengthened.
Paul Laudicina: Knowing China as well as you do, Jurgen, I certainly respect your opinion on how China will emerge from this crisis. More generally, we know leadership everywhere matters. Are you generally optimistic that we’ll have the right mix of leadership in a post Coronavirus world to restore the global community with the right principles, purpose, and capabilities needed to move the world forward?
Jürgen Hambrecht: I’m still optimistic that within our countries in Europe and also in the US, we will find leaders who may be able to cope. There is one single thing which is missing at this very moment. And this is a sense of solidarity on this earth. Cooperation and collaboration is much, much better than protectionistic approaches.
Paul Laudicina: Yeah, that’s certainly the universal hope I think of all of us. And I can see it going either way, Jürgen. There’s a lot we don’t know right now about how long this crisis will last, the kind of leadership that will take us through it, and the kind of leadership that will present themselves to pick up after.
But there’s one leadership proposition that we haven’t talked about. What about the future of Russian relations with the rest of the world, and how significant will that relationship be going forward on many of these kinds of issues in your view?
Jürgen Hambrecht: Now also, again, a relatively complex and difficult question. Now, Russia and Putin, as a person, I think need to be understood from the background of the former Soviet Union and the fall of the Iron Curtain with a split of the Soviet Union and then later the reunification of Germany, with all kinds of conflicts in the, in our political landscape in Europe and the rest of the world, has certainly pushed Russia and put in into a relatively difficult position. In order to help him to get out of this position, we need to talk to him. We need to listen to him, and we need to really understand what he really wants to achieve. And certainly there have been contractually and verbally promises which have been not fulfilled from the Western world as well.
There are reasonable prospects going forward—only, however, if we talk to them, listen to Putin and help him to get Russia running much better than it is today. And the only solution here is, for example, raw materials. Not very much liked in most countries, but this is a way to help him.
And by the way, it’s a geopolitical issue because if you look into gas supply in Europe, we are heavily dependent on Russia. Russia has always been a very, very, very reliable supplier. We cannot, absolutely not, complain. Diplomacy is really needed here and the build-off of a deeper-rooted business relationship on both sides.
Russia is basically part, and this is also the understanding of a greater European landscape. However, they have alternatives, and Russia is working on this alternative. This is a closer tie to the Chinese hemisphere. And we should avoid to do that, to let this happen. I personally believe the basic things the culture of the Russians is very much European, and we should build on it.
Paul Laudicina: Jürgen, one of the parts of the world we have not talked about is, of course, emerging markets, frontier markets around the world. Much of the COVID-19 global press coverage has been about Europe and the US and China, South Korea to be sure, but the crisis is just manifesting itself in emerging markets.
What are your expectations—fears, if you will—about how the coronavirus would prospectively ravage emerging markets, and what does that do for global cooperation? Questions that have to do with bridging gaps in wealth between rich and poor countries and so forth, on which we had been making progress, how do you see all of that coming out of the other end of this pandemic?
Jürgen Hambrecht: Poor countries and emerging countries will suffer most. And it’s only the start. We see it emerging as you said, South Africa before. We see it in a few other countries, but it will come and not just talking about Africa. We, early this year or end of this year, we talked about the African century. I think this is pushed back quite a bit.
But we also have, let me say, all the Southeast Asian countries—India, Pakistan, Afghanistan, Bangladesh, what you have—all those countries will suffer most because they are living in mostly in densely populated big cities where you cannot have a social distance, without water, and without healthcare. I think is a matter of humanity to help those countries.
And all of that talking about this big debt trap we are all sitting in is coming on top. And I think we need to set priorities. This is what I’d call crisis management. The priority is to help those poor is of utmost importance because if we don’t help them, they are already migrating to Europe, and they will migrate even more vigorously.
And what we will see is fighting at the borderlines. We will see people suffering a lot, up to starvation, which will occur because there will be no money to build other reasonable agriculture in these countries. So I think there is a need to help.
And here comes another topic, which is our global institutions like WHO, like OECD, like World Bank, or like the United Nations are now on to the test bench. I think we need to reinforce them and not to make them weak because constantly we are working to make them weak because of very specific interests in the respective regions.
We need to come together in a solidarity act here because—this is from my perspective, I can only say this is the worst thing which can happen—the poor in emerging countries have been hit most by this coronavirus.
Paul Laudicina: Yeah, this is clearly the institutional weakness, global institutional weakness, the in some ways unraveling of the Bretton Woods Institutions and so forth. Clearly, one of the big challenges coming out of all of this is what kind of global governance structure do we have to make the right kinds of decisions based on the principles that need to guide us going forward? Absolutely clear, and I quite agree with you, Jürgen.
You have led your company through difficult times before, and you are one of those rare leaders that’s always been driven by purpose and principle and passion, if you will—balancing the need to deliver broadly to shareholders as well as at the same time looking at the stakeholder community and questions of social value and how you managed to achieve both of those purposes as a leader. Are there some universal leadership lessons that anyone—private- and public-sector leader or like—trying to lead through this crisis should bear in mind that would be useful for you to share?
Jürgen Hambrecht: I have a triangle I always have in my mind if it comes to leadership, and this is first, authenticity; second is respect; and the third is empathy. If you have these three in your mind, I think you are most probably handling things appropriately.
However, as we are living now in a world with dynamics of media which are outstanding, immediate, very direct, emotional, and as we are living in volatile societies with a lot of uncertainties, especially now with this virus crisis, this makes people nervous and leads very often to radically and quickly changing positions.
Here, I think comes one thing on top of this triangle, and this is you need to communicate more immediately, more directly. You have to give guidance, where you are heading to, it has to be understood by all of your people who you are responsible for and you will take care of and you need to follow up. You have to build on trust. So, reliable, comprehensive, and transparent acting, it has to be understood. You have to be your own model.
And at the end of the day, I strongly believe that in each crisis, there is a chance. And the chances in this crisis is again on speeding up technology in order to help, and this can be multifold. For example, AI, digitalization, which is needed any everywhere, online teaching, for example, has to be a real base for the future, if such kind of crisis occurs.
Secondly, I think looking into the mere technology side, gene CRIS-cas, genomic engineering, red and blue and green biotechnology has to be promoted as fast as possible.
And different business models which avoid transportation have to be enforced. All this kind of things we should address, and leaders should not forget as we go forward, and then we have to find surprises to take care of the future. This is very often forgotten because we have to spend so much money, still money for education, for innovation is needed, and those who are working in this sector should be supported to the utmost.
Paul Laudicina: Jürgen, that’s a very good note on which to conclude this conversation, very inspirational. Jürgen, thank you very much for joining us for sharing your insights, your wisdom, your experience across a broad swath of issues. It’s been a great pleasure to have you, and I appreciate the time you’ve taken to join us.
Jürgen Hambrecht: Thanks, Paul. Good luck. Stay healthy. Take care. Bye bye.
Paul Laudicina: Same to you.
Wrap-Up (Paul Laudicina)
Thank you to my good friend Dr. Jürgen Hambrecht for joining us today.
There’s only so much ground we can cover in one interview, and we’re aware there are undoubtedly many more questions that you might wish we had been able to discuss during each podcast. So don’t hesitate to be in touch with me with any additional insight we might be able to provide by contacting me at [email protected] or on Twitter @paullaudicina, and I would be happy to respond.
We’ll be back with more episodes of “Coronavirus: a world transformed” soon, so stay tuned. More is coming.
About Jürgen Hambrecht
Jürgen Hambrecht is the chairman of the BASF SE Supervisory Board. In 1976, he joined the Polymers Laboratory of BASF. After various positions, he was appointed head of the engineering plastics division in 1990, and in 1995, he became head of the East Asia division, based in Hong Kong.
In 1997, Jürgen was appointed as a member of the Board of Management, and from 2003 until May 6, 2011, he was chairman of the BASF SE Board of Management.
Jürgen was born on August 20, 1946 in Reutlingen, Germany. He studied chemistry in Tübingen and earned his doctorate in organic chemistry in 1975.