← Redefiners
Redefiners
The Urgent Race to Create 800 Million Jobs: World Bank President Ajay Banga’s Global Challenge
00:28:50
Roughly 1.2 billion young people will reach working age in developing countries over the next 10-15 years. However, current projections show that only 420 million jobs are expected to be created by that time, meaning millions of young people will b...
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- [00:00]
A
Call them change makers, call them rule breakers. We call them redefiners.
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B
Hello everybody, and welcome back to Redefiners. It's Clark Murphy, a leadership advisor with Russell Reynolds. And I'm happy to be joined again by my fabulous co host and global citizen, Marla Oates.
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A
So great to be here. Wonderful to see you. I'm really excited for today's episode.
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B
Today is a global boat across the ocean, if you will. But before we get started, just a reminder to our listeners, you can find all the episodes of Redefiners and Leadership Lounge on YouTube. If you're currently watching Redefiners on YouTube, just hit the subscribe button so you don't miss an episode. And for our audio listeners, don't forget to rate redefiners. Wherever you get your podcast, we'd love to see your feedback and hear your questions. Today we're in for a wealth of leadership lessons with a global guest who's been recognized for his work in both the private and the public sectors. It's someone who's led a global financial organization to incredible transformation and phenomenal heights. At the same time, he made financial inclusion and advancing equitable and sustainable economic opportunity core parts of his company's strategy.
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A
Indeed, Clark. And in his current role, our impressive guest today is harnessing the power of the developed world for the needs of the developing world. Leading one of the world's most influential financial institutions, he's done an amazing job tackling poverty and building sustainable economic development. I'm really excited for today's conversation, Clark. So tell our listeners who our fabulous guest is today.
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B
Ajay Bunga, the president of the World bank and currently two years into his five year term. And for those who may not know, the World bank, it was set up after World War II primarily to finance the reconstruction of Europe. Previously, Ajay was vice chairman of General Atlantic, and as many of our listeners know, he spent over a decade as the CEO of MasterCard, transforming that company into one of the more efficient, successful payments businesses in the world. He's also served as a board member of the American Red Cross, Kraft Foods, and Dow Inc. Ajay, welcome to Redefiners.
- [02:12]
C
It's a pleasure to be with you, Clark.
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B
Before we jump in, for our listeners around the world, almost everyone knows, of course, the World bank, but it has iterated over decades. Could you just give us a description of how you see the World bank today as an institution?
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C
Yeah. So the institution is very focused on the elimination of poverty. That's the basic objective. And it consists of five units and the one that people know is the first one back in the Bretton woods creation was the International bank of Reconstruction and Development. And that kind of lends to countries that aren't in the poorest category but, but haven't yet reached the stage where they can be mature, accessing financial markets on their own with great institutional strength and so on. So all those in between. The second part of it is the International Development Association IDA which caters to the currently 70 odd of the poorest countries in the world. There we tend to give them financing that is very deeply concessional. One third of the money currently is pure grants, no repayment, no interest. And the other 2 3rd is deeply concessional. The third is the International Finance Corporation that deals with the private sector and trying to figure out how to mobilize money from the private sector into the development opportunity in the emerging markets. And that part is about let's say 25, 30 billion a year. IBRD is about 30 odd billion and IDA is about 30. So that's roughly three equal parts in volume. And then the fourth part is called MIGA, which is the Multilateral Insurance Guarantee Agency works with the private sector to try and take away political risk insurance onto their challenges of investing in the emerging markets. And then the last part is ICSIT which is the settlement of investment disputes between a sovereign and a private sector entity. So that's kind of the five units all put together, we probably put about 100 to 120 billion to work. We mobilize about another 50, 60 billion of private capital and another 70 odd billion that gets from the private sector into the bonds that we use that we raise to raise our size of our financing envelope. The last thing you should know is there is the money side of the bank and then there's what I call the knowledge side of the bank. And in many ways Clark, the knowledge side of the bank is even more valuable than, than the money side because in the knowledge side come the amazing people of the bank with their subject matter expertise on everything from water to schooling to skilling to bridges to, you know, you get the idea. And they've lived and worked in all these countries around the world. So when you, when you get that pool of people together, the best practices and the depth of knowledge that's really well appreciated by even developed countries, let alone the poorest developing countries, that's the institution about 25,000 odd people based all over the world.
- [05:03]
B
And do you have other moments either economically or politically that some aspect of the bank gets more emphasis than another? And if so, what moment are we in today?
- [05:14]
C
Yeah, so I think the moment we're through right now is the fact that the realization is coming across the world that there isn't enough public money. Whether it's money in governments, money in multilateral banks, or for that matter, money in philanthropies. There just isn't enough to meet the challenges of development the way they're currently being described. I describe the challenge of development as being the need to find the demographic dividend coming through the emerging markets. The need to find them productive opportunity where they can have hope and optimism. Young people, 1.2 billion of them are coming through the pipe over the next 15 years, give or take in the emerging markets. And right now projections are that the number of jobs those countries will create is less than one third that number. So the problem is you've got a lot of people there. Some will be educating themselves, some will want jobs of different types. It's a lot of hundreds of millions of people who won't have the hope and optimism. In addition to the practical reality of earning for their families, they that to me is the development challenge of our time. It's exacerbated by the challenges of fiscal issues with almost every type of country from wealthy to developing. And then it's exacerbated by things like pandemics and hurricanes and the challenges of adaptation for the poorest countries. Kind of put all that together. That's a big pool of money, technology ingenuity that you need. The time we are passing through right now. Clark, to your earlier question is the realization that if the private sector does not show up at the table to do and help by its investing its capital, its people, its technology in the emerging markets, the task of development is too big and too expensive to be done without them. That change is very new and very important.
- [07:12]
A
Thanks Ajay. Super helpful context if we take a step back. You stepped into your five year term at the World bank in 2023 with this clear mandate transform the 80 year old institution to a faster, more efficient, more impactful partner in development, which you've highlighted. You've also helped usher a new vision and mission for the World Bank. Creating a world free of poverty on a livable planet. These are really big goals for a complex international development organization. What were some of the first things you put in place to get everyone aligned on the same page with respect to mandate, mission and vision?
- [07:50]
C
Well, so first of all, remember that the bank's mission and vision, while it's quoted as a bank mission and vision it actually should be the mission and vision of the development community across the system. Because what is wrong with the idea of all of us putting our shoulder to the wheel of a large task like eliminating poverty on a livable planet? So I think, yes, it's our mission and vision, but I don't see us as doing it alone. We're just one boat in the sea and we need an armada floating towards the other direction to make this work well. So I kind of remember that as the basic cultural thing we have to embrace the which is we may be the biggest multilateral bank, but we're one boat in the sea and trying to take others with us would be a good move. And that's the idea of partnership, which is deeply embedded in the cultural change we're trying to drive in the institution. The second thing we're trying to drive in the institution is what you started your question with, which is the faster, cheaper, better idea, which is kind of not how bankers describe themselves, but I do, and I think the idea of getting it in simple terms is if you can do things quicker, approve a project faster, get it constructed faster, do it at a price that is easier for these countries, and do it with the quality standards that would make you proud. You won't get it right every time, but try to do that the right way, you will eventually be an even better partner for these developing countries. That's the two mantras that are part of what we are trying to drive in the institution. And the way to drive these is the standard playbook that you guys know well. First is make sure you speak about it frequently without getting tired about it in the simplest possible terms so that the junior most employee and the senior most employee, all your stakeholders, can engage with you. The second one is try and create the right measurement systems. So for example, we now have a monthly KPI deck which is shared across the entire institution across those five silos so that we're all talking the same numbers, get to measure the same things. So as they say, if you don't measure it, you're not going to fix it. And so that's the second piece. The third one is organizational alignment through organization structure. We're cutting silos across the institution through common country managers, common middle and back offices, a common knowledge bank, that kind of thing, a common treasury. And then the fourth item is how do you reward the people who embrace this more than others do? How do you reward those who drive cultural change in the right way? And how do you give them the careers that they deserve and Want. It's kind of a mix of all those. We're on a journey. We've got some of these better sorted out than the others. But that's what I'm trying to do.
- [10:41]
B
Ajay, you've transformed a series of institutions and cultures and businesses. Twenty years ago I was in London, I called you in Hong Kong and asked you if you wanted to run MasterCard. And I'll never forget, one of the biggest things you all had done at Citi was, and people will laugh today, you created a card with a chip in it for the Singapore subway system that passengers could come in, tap the card and. And keep moving. Correct. So back to your point about better, faster, less expensive. You were doing that ahead of the curve. The World bank is a massive institution. What are the kind of the early simple things you've tried to do to create better, faster, more efficient?
- [11:26]
C
Yeah, Clark. So, I mean, you're reminding me how long we've known each other, which is probably not good for either of us. But the. There's some very simple things. The first one was it took us 19 months, Clark, to get a project from conversation to approval by the board. It used to be, we're now down to about 12. But inside the 12, what I'm really happy with, there are projects get approved in one and two months, like a healthcare clinic. And then there are those that take three years, like a hydroelectric dam, which by the way, you would expect you. You know, hydroelectric dams are complicated things. Healthcare clinics, once you've got them, you should be able to replicate them. As you and I have said often steal shamelessly and replicate. Right. That's kind of the mix of projects that's inside the idea of 12 months. That's one thing. A second one, was I briefly mentioned it, is that We've now got 40 countries where the country manager across these five World bank institutions as one person. And now what we're trying to get to is make that true for every country in the coming six to eight months. So basically by the middle of next year, it should be one management team across the system. We're putting treasury together, putting HR together, putting real estate together, doing the things that should be done to enable this to happen. A third element of this is, is the partnerships we are building with the other multilateral and regional development banks. And there, what I'm trying to do, aside from working bilaterally with each of them on focused areas, is we have created a digital platform which every one of us can now populate a project into so that the others can co finance it for a client without the laborious process of me first getting it, then bringing it to you and then taking it to her and finally ending up with that client having to go through three project approvals, three due diligences, if you know what I mean. Right. Trying to kill that in the same way is the partnership we are building with the private sector and we've created a private sector lab. And actually one of the members of that lab who's helping me a great deal is someone you know well, which is Doug Peterson, who used to be the CEO of Standard and Poor's. And he's helping me build out a originate to distribute model, essentially trying to create an asset class in emerging market investments that could attract pension fund asset manager kind of money, but also a series of other things ranging from first loss position for us in equity, things of that type that will help a private sector player relook at their risk, reward relationship of investing in that project and feel that it's not above their mouth and nose, it's actually below the chin so they can enter. Those are the kinds of things we're working on.
- [14:23]
A
As Clark mentioned, you were the CEO of very prominent business with MasterCard and now you're in the process of redefining the World Bank. Tell us, was there a redefiner moment in your career path, Ajay?
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C
I don't know that I am redefining the World Bank. I think there's a bunch of us working at this. You know, we look like ducks on a water. It looks very calm on top, but down below, there's a lot of peddling going on furiously to help this happen. And it's not one duck, it's a bunch of ducks trying to do this together. So I think you'll see my view of leadership comes from that view. And I'll come to that in a minute. My redefining moment. Yeah, I mean, look, I had a boss back in Nestle when I was a young management trainee, Irishman called Barry Ryan, Finbar Jeremiah Ryan, big guy. His arms were bigger than my thighs. Just so. You're a tough guy. I was in India at that time as a management trainee and he was the managing director. Like there were, you know, eight levels between us. And somehow he decided to take a shine on me and he really changed my way of thinking. He said to me, you're a really smart guy. You need to stop taking no for an answer. And I said, what does that mean, Barry? And he said, a lot of people will tell you, we've tried this, it didn't work. Now you don't know why it didn't work. It may have been too early, it may have been executed poorly. It may not have been exactly what you are describing. But people will put that into a bucket and say, same bucket. If you do that, you'll never figure out what you could actually do. So, yes, be constructive. Listen to others, take their view, make up your mind with urgency and try and think about not taking no for an answer just because someone told you. We tried it in 1942 and it didn't work. If you think about it, that's a pretty important element of change management. I think leadership is a privilege. It's not something that's your birthright. You're not born to be a leader. I don't believe that's how it works. It's a privilege. You get along the way in your career and if you worked for someone and you looked up to them and you wanted help and guidance from them, now it's your turn to help develop others and to give them a North Star to row towards. And I think realizing that as a privilege rather than something that's given to you, very simple words, very few people actually live that out. And therefore, leading with humility, leading with humor, leading with the willingness to learn from everybody, but owning the decision making, owning the sense of urgency, owning the sense of taking a thoughtful risk, that is an interesting combination and doing so. Where you define where you want to go in the simplest terms, as we discussed a little while ago, you create the right tools that measure your progress. You celebrate the success. You pardon people who make a mistake so long as they don't make the same mistake two and three times. But you move on and you encourage them to make that mistake. You encourage them to take a risk and to fail fast. These things are all part of leadership. And the most important attribute in leadership is a degree of paranoia. Not paranoia about the people who work for you. That's the wrong kind of leadership. Paranoia about not being complacent about the position of your institution or your business in the market in which everybody else is competing to get ahead of you. The day you get complacent is the day you lose. And therefore the willingness to have people around you who don't look like you, don't walk like you, don't talk like you didn't go to the same schools as you didn't work in your prior job with you, that is real diversity. That's the diversity you really need at your table. People with a Different background, different skills, different experiences. So they wake you up to your blind spots. And, and I think that concept is the ultimate foundation of a good leader, the willingness to embrace those who will teach you that you're not right.
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A
We'll be right back with Ajay. But first, let's hear from Rebecca Hart, a leadership advisor in our Atlanta office. She will discuss why the most successful leaders prioritize curiosity over having all the answers.
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D
As leaders advance through their organizations, they accumulate experience, sharpen their instincts, and develop deep expertise. This positions them as go to problem solvers who always know what to do. But that same expertise can become a trap. When leaders believe they have all the answers, they stop learning. They become complacent over relying on past experiences instead of embracing new insights. For leaders to be effective in today's rapidly evolving landscape, curiosity isn't optional. It's essential. Through our research and work with executives worldwide, we've identified five advantages that curious leaders consistently unlock, from better problem solving to continuous growth that keeps them relevant as demands evolve. To learn more about the five advantages of curious leadership and how to develop this critical trait, view the links in our show notes or visit russellreynolds.com.
- [19:55]
A
Now back to our conversation with Ajay.
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B
Ajay, you're famous for disliking bureaucracy, famous for action orientation. You've said it again and again and again throughout your career. I've always been amazed at the same time that if one tries to communicate with you by text or by messaging or by email, you answer incredibly quickly. You always have. I don't know how you do that. I'd love to know the secret, but that's not the question. You do talk about the decency quotient in a speech you gave at Duke's Fuqua School. Talk to us about the decency quotient as a leader or for you personally.
- [20:33]
C
So, Clark, that came about actually in a town hall at MasterCard. I was trying to explain to people in my second year what I meant about leading the right way. And, and you know, my sense of humor kind of kicks in every once in a while. I'd just come from listening to Warren Buffett talk about dq, which in his case was Dairy Queen, right? And I come to this town hall in the morning. It's 8:30 in the morning, and somebody asked me a question about leadership by example. And I said, listen, when I was a young guy, you know, I'm dating myself. Like you dated yourself a little while back with how long you know me? And so I said, it used to Be iq, that mattered. You, your intelligence quotient, you had high iq, man, you were set for great things in the world. And then by the time I reached business school, remember, the theory had evolved into eq, as in you couldn't choose your bosses, you couldn't choose your colleagues, but your ability to manage with equanimity, to manage with the right approach to handling difficult challenges, that would be a defining trait in a leader. And I said, I felt like now we were at a stage of development in the world and systems that your decency quotient, your DQ and not Dairy Queen would matter because people need to know that you're leading because your hand is on their back. It's not in their face. People don't want a, they don't want a free ride, they just want a fair starting point, the same starting point so the winner can win for the right reasons. And I think leading with that ability to make people feel that you're going to be a hard taskmaster, you're going to be fair rather than kind. By the way, these are all very simple words with very deep meanings, but you're going to be fair rather than kind and that you're going to lead with a hand on their back and not in their face. That to me is what DQ is about.
- [22:25]
B
We worked in the global world and global growth was good and global synchronicity was good. The World bank is a global institution with tough tasks. How do you look about the relevancy if one accepts it may be a post global world? How does the World bank fit into that or what are your opinions on that?
- [22:45]
C
Globalization is still there, it's just a different type. A model has been followed for the last, I would say three to four decades with the WTO leading the way in a very good way. And with the accession of China to the WTO back 25 years ago when one of the largest production centers and consuming centers of the world came into the system of the wto. That growth was driven by a series of things where supply chains move towards just in time. So a computer which you buy has its different components and made in eight different countries, but assembled in a ninth one. And all that somehow used to work perfectly for Clark to buy his computer from Best Buy the moment he wanted to. And I think that may not be what we see going forward because what that has led to is effectively at one end, the outsourcing of certain kind of jobs from the developed world to the developing world that has helped to alleviate poverty. I mean change. China alone has generated hundreds of millions of jobs, and so have India and Bangladesh and Vietnam and Mexico and so on. But the result of that has been that aspects of the Western world are fighting back against that, both for economic reasons and therefore emotional reasons connected to your pocketbook, but also for reasons of national security and geopolitics. And I believe that therefore a new model is emerging which is more relevant for locally relevant jobs. From infrastructure to primary healthcare delivery, to agriculture for small farmers to tourism to value added manufacturing for local and regional consumption and certain critical minerals and metals the world needs, and so on and so forth. These new models still have globality just defined differently. So I'm kind of a believer in the evolution of globality rather than one version of globality being the only one. That's what I'm trying to fit the bank into.
- [24:49]
A
Ajay, we could talk to you for hours and would love to pick your brain on all kinds of topics. But we've come to the part of our discussion we like to call Rapid fire questions. And this is really an opportunity for us and our listeners to get to know you better. So we're going to ask you a couple questions. You get one sentence or less to respond. Are you ready?
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C
Do I have to reply? Yes, you do.
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A
Not Optional. All right, question one. I've heard you have several motivational posters in your office. What is a favorite one and the quote that you think is most important for leaders today?
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C
Question. Everything always.
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B
Who is the most important mentor and biggest impact on you?
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C
Two people. That guy Barry Ryan and then Sandy Weil. When I was at City, if you.
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A
Had to teach a class on one subject, what would you teach?
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C
Decency. Leadership.
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B
If you had an extra hour of time every day, how would you spend the time?
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C
Goofing off.
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B
Well, you don't have the extra hour. Tough luck.
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C
I don't have enough goofing off time.
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A
When you have the opportunity to goof off or decompress, what does that look like for you? Ajay?
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C
Honestly, I exercise in the evenings. I try and get that hour in the evenings at least four days a week. That's my way.
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B
If you could have dinner with one world leader, living or dead, who would it be?
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C
Nelson Mandela and Mahatma Gandhi. And please ask me why.
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B
Why are they your heroes?
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C
Because one man can make a difference.
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A
Oh, fabulous. Describe what makes a great leader in five words or less.
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C
Empathy. Humor. Humility. Hard calls.
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B
Ajay, once again, thank you for being here and taking the time. There's so much we could discuss on the global stage and in the needs of the World Bank. But I think you said it most simply that the challenge is to find the demographic dividend and to have hope and optimism in the developing world for what the developed world can do. Of course this is exacerbated by fiscal issues, by human beings in politics. But ultimately the private sector needs to bring its seat back to the table, which you're helping it to do. And we have to think about. The mission of the developed world is not just the mission of the World Bank. The World bank is one boat in a very large sea. And your goal is to make sure that the developing world puts all the boats in every sea that's possible. And as you said, having looked at your experience and transformation in other roles, you'll just steal shamelessly and repeat and repeat and repeat. But at the end of the day, we have to make sure that the world understands the need for change management. The world understands the need for simplicity to celebrate the successes that we have. And the world needs to see the World bank taking 19 or 20 months to get something done to three months for a healthcare institute, or even down to a year for something major. But the World bank has shifted in how it operates in a rapidly changing world as you have helped guide it. And Marla, your thoughts on what Ajay talked about from his personal leadership.
- [28:00]
A
I just love how you simplified leadership. The message I heard, keep the message simple. Measure and identify the KPIs. Get everybody on the same page. Step three, break down the silos. And step four, reward those driving the change. It's such an inspirational and simple message. And I think too importantly, you said, look, one man, one woman can really make a global difference. You've done such an amazing job at the helm of the World Bank.
- [28:31]
B
So Ajay, thank you for reminding us that never take no for an answer. The similarities of the World bank and the search business are never take no for an answer. So perhaps you're being here is because we wouldn't take no for an answer. Thank you, thank you, thank you. We appreciate it.
- [28:45]
C
Thanks guys. Bye. Bye.