Endgame with Gita Wirjawan - Jacek Olczak: Embracing Science to Solve Everyday Problems

Episode Date: July 31, 2021

In addressing our world's most pressing problems, we need to put science front and center in policymaking, business, and everyday life. Philip Morris International CEO Jacek Olczak thinks breakthrough progress can only happen if we remain curious and are willing to change our minds in the face of new evidence. In collaboration with HM Sampoerna Tbk.

You've mentioned publicly a few times about how you want to leave a legacy of, you know, PMIs and smoking. Talk about that, you know, going smoke-free. The question is how we can use the science and technology today to address it, to have a product for the people who otherwise in our case would continue smoking. This is Endgame. Hi, my friends, we're here we're at a sec O'Zek, Pimpinan from Philip Morris International.

Hi, Yasek, thank you so much for coming on to our show. Hi, Gita, thank you very much for having me. As usual, you know, I usually start off with simple questions about how you grew up and what got you interested or what sort of subjects interested you in early days, all the way to your university days and how you basically became what you are today as a captain of industry. So I was born in Poland last century, obviously. It was 65, 1965. I was educated almost for the whole educations when Poland was still the communist regime. And just about the last year of my university, you had solidarity, Berlin Wall, first free elections and Poland moved to the

democratic system, essentially liberalizing economy and I was lucky to be born a Finnish university at the right time. So you know, you have to imagine when I entered university in Poland, we didn't have passports, right? So we're not free to travel. My parents were investing in the after-school activities, which was essentially English classes. But at that time, you didn't have really access to any English news media and, you know, actually even not too much of the literature, you know, any science books, etc.

So it was a little bit of, you know, one could say useless investments because you can learn English, you will never have a chance to practice. And then boom comes the miracle, the system collapses, and they gave me a passport so I could travel. So I finished economy, I started economy, and you know, you might be laughing, but I watched the movie on the first Wall Street, right? Right, with Michael Douglas? Yeah, Michael Douglas, the Sheens, etc. Yeah, Gordon Gecko. Absolutely.

How could anybody forget that movie? So, you know, I was that, you know, still a young, you know, a person, young student, and I watched this movie, and I started liking this way, this world of finance. And I also like the way they, you know, they were dressed. I don't know, you remember, there was this double, double button suits, etc. So I thought, you know, I watched this movie in a cinema in my hometown, and I said, you know, what, I want to be a person like that. So, you know, this is why I studied economy, I learned accounting, and actually my first job was in an accounting. And this was just after opening of the system of the borders. So I was lucky.

I found a company in London accounting firm, moved there, and with that firm get back to Poland. And I was all the time in finance. So it was, you know, auditing firm, consulting firm. So it was all great. You know, I started realizing a first step to achieve my dream. to be in the world of finance. But it was consulting, right? So you're not really making a decision.

You're advising others and how consultant works. They give you an advice and then in a footprint. They make all the disclaimers. The risk is on you. And Philip Morris at that time was looking for the head of the finance department in the very small office in Poland. It was less than 100 people. So I thought, yeah, why don't I try myself to be ahead of the finance of the small office?

So I started. And I actually thought I came to Philip Morris for like a couple of years. I learned something and then I hope to another company. This was in 1993, right, when you joined? Yeah, there was 1990. So essentially by 1996, 1997, I should be changing jobs and going to another company. And I have to say that I failed with this objective because I stayed here for 30 years. And, you know, the long story short, you know, from finance I moved to operations to manufacturing.

Right. And I was working there for a good few years. I fell in love with manufacturing. More than accounting, I actually thought that the life of a accountant was pretty boring. You know, engineering life is much more excited to solving. real problems, you know, it's a lot of group work and so on. From a manufacturing, Philip Morris offered me a job of a sales director in Poland. At that time, we've been already running almost 40% market share.

We had thousands of employees after privatizations when we bought one of the major manufacturers in Poland. So it was really, you know, very sizable, very big business and important to Philip Morris. And then from a sales department, then I assume my first role as a general manager. So they sent me to Romania, from Romania back to Poland. Then Poland became the center for the area, so the Central Europe, etc. And then I moved to Germany, was running Germany, Austria. Then I became the regional presidents for the European Union. And this was about the time that I completely forgot that I started about finance.

and my dream was, you know, to play high in the finance world, I was promoted to the chief financial officer. I have to say that, you know, becoming a chief financial officer, I actually realized my dream, which, you know, was born during this, about the two-hour cinema movie some years ago, right? And I say, you know, it's a nice reflection, right?

You finally got it, you know, you get. get there through the different path that you had initially in your head, but actually you don't complain that you concur the mountain through the different path, which you know, which you drove yourself on the map. And then after CFO, when I thought it's about the culmination of my career, then I got all operations, which is nothing else than all the hundred plus markets in which we operate and all factories and you name it. It's essentially all PNL was under my supervision as the chief operating officers.

when I thought that that time well this is a mountain even higher than I dreamt that I was dreaming before and that's essentially fulfills all of my expectation then as of last month I am a chief executive officer so

you know I don't know what's the I don't think what's the learning from that thing that maybe when you are young it's worth going to cinemas and you know watch the good movie and try to try to have a I think it's all about the dreams and what you want to achieve.

When they ask you to switch over from finance to other divisions, did you have an option to say no? Or was it pretty much like you have to? Yes. Well, no, no, look, it's, you know, normally and humanly run organizations, you always have the option to say no. But it's more about trace that the company is putting a time pressure, right? the more time you get to think it through, and presumably you will never be conclusive, right?

Because your brain will start analyzing all the pros and cons, and that's the perfect situation that you will not make any decision. You know, if you'll ask your kid to first time to go to the swimming pool, you need a little bit of push, right? I mean, I haven't seen the kid, you know, jump into the water without some sort of encouragement. from a parents to put it like that. So it's a little bit like this.

A company gives it an option. But again, I think it's much easier with employees if they know where they want. Look, in every job, you have a learning curve, right? So you're in your comfort zone, right? Because you know a lot of things. You know the people around. You know whom you are dependent on. Do you know who your internal customers?

So, you know, after six months in a job, you start really, you know, be very comfortable, right? What's the job about? Right. And every time you change the day. your job, you start from scratch. So, you know, beginning of the learning, whatever that new thing is, are not very, you know, a pleasant moment. Right.

I want to pick up on this. So, you know, it sounds like a typical story of how anybody makes it to the top at a multinational company. You've got to be broad-based, right? You've got to be exposed to different areas of the organization, right? How would you compare this ladder climbing to the startups that we're seeing nowadays, right? You know, these startups that have just started some years ago, they've grown to be, you know, multi-billion dollar companies, right, in no time as compared to the amount of time that it took you, 30 years, right?

What advice do you have for some of these young techpreneurs who probably are going through a completely different universe? Or is there a similarity? Well, I think it is more of an opportunity which young people have today, which was not that much laid down in front of me, 30 years ago. I don't know how I would act. you know, 30 years ago, there was this alternative path well established to go and start your own business and, you know, start being an entrepreneur. But I also learned one thing that, you know, in a corporation, even of the size like Philip Morris, the entrepreneurial skills, the entrepreneurship is something which is a very good,

is a very good competency of very good value which is bringing to the company. You know, I've seen a lot of people. I've seen some people who are unsuccessful in a company like Gavores, not because they made the bad decision. I mean, they were unsuccessful because they couldn't make decisions, right? So that's a completely different thing. I mean, actually, I've made the mistakes in my life. The question is not that in a company is like here,

you cannot experiment, you cannot take the risk. It's more, you know, how quickly you learn from your mistakes and I move forward. I want to pick up on, you know, you've mentioned publicly a few times about how you want to leave a legacy of, you know, PMIs unsmoking. Talk about that, you know, going smoke-free. And you've been pretty bold about this. Yeah, we are very bold because we know what the science is about the product. But just to start that we'll understand what we're talking about. The prime cause of a harm caused by smoking is the fact that you inhale the smoke.

The smoke is an outcome of a combustion. So you burn the tobacco, you burn the cigarette. You burn any organic matter. You inhale the smoke, it's bad for your health. If you like a grill party, the person who is supervising the grill and, you know, turning the beef on, you know, both sides, etc., presumably inhale such amount of toxins that it's really bad. Okay, so that's how the nature works.

You burn something, you inhale the smoke, bad for your health. But there is another aspect of that thing, right? I mean, people use cigarettes because they like them. It's difficult to understand for the non-smoker, and the non-smoker shouldn't start smoking because of the health, etc. We all know this whole thing, but for the smoker, they like smoking. Okay, despite the fact that people are,

that smokers are aware of the risk, associated with smoking. So, you know, many, many years ago, when we said, okay, cigarette is causing the harm and these are these diseases, whether respiratory or cardiovascular, cancer, et cetera, as an outcome of smoking, is there a way to design that product

or come up with the product, which is as much as possible reducing the negative consequences, but somehow retains the pleasure component of that fake. Okay, and that component frankly speaking is very much coming from a nicotine, but there's also the ritual, the hands mouth, hand to mouth movement, you know, all of this thing. So nicotine is not really an issue of a cigarette, it's not a prime cause of harm, it's all the what we call the tar, I add all the other components which you have in a smoke. When we change the process and we don't allow the tobacco to be burned, but we

heated to the very precise level of temperature so as not to trigger combustion but enough to release some flavors and nicotine which naturally occurs in a tobacco. You're coming with the product like our ICOS, the heat not burn product, that you have an aerosol which has some similarity in terms of a taste to the burned cigarette, but you reduce the exposure of the human body to the the toxicants by 90 to 95%. So you have a significant reductions in exposure. I think there is enough of the science,

and this is not only other science, but the scientists from government agencies like food and drug administrations in the US, in many other places, which will tell you it's absolutely, absolutely fair to assume that if you have such a drastic reduction in exposure to toxicants, you also should change change over a period of time.

Essentially, you have a less risky product, right? It's not a risk free, has a nicotine, nicotine is addictive, but nicotine as such doesn't create the problem, is the other substances which creates the problem, you significantly reduce the other substances, you have a much better product. Obviously, always the best decision for a smoker is to quit smoking altogether.

However, we know that the consumers are not doing this whole thing. for the variety of reasons. But to be very frank, we all know that, you know, we should sleep longer, we should have a more physical exercise, we should eat better, we should drink less,

we should have less stress, and, you know, if you fulfill all of these conditions, you will improve your quality of life. The reality is people don't do it. So now the question is, how we can use the science and the technology today to address it, to have a product for the people who have a rice in our case would continue smoking.

Because even WHO in their own estimates, they will tell you that, you know, five, ten years from now you'll have the same if not more smokers than exist today because you have a growth of the population and even if some people decide to quit smoking, still majority doesn't, don't quit smoking and therefore you need the product for them. So legacy, when you ask about the legacy, we start with the project, six or so years ago we had we had science we had a technology but we're missing a last component well consumer accept the product and you know this is like a little bit like in a pharma industry you might have a great pill great

medicine which addresses the problem but if you don't want to take it if you don't want to swallow it you're still at the square one right I mean so you know the question is will consumers will smokers adopt the product so six years ago we We had absolute zero, no sales of this product. Last year, 25% of our total global revenues were already coming from this new product. So we know that there is an acceptance. Many people still have a confusion. The product contains tobacco, it has some, some look generates aerosol, that the

aerosol look like a smoke, so it must be a smoke. You know, all of these things needs to be explained. But as I said, 25% coming, rather total global revenue coming from this product. So my legacy and this, you know, word can be used in this context. You know, five years from now, I think Philip Morris has a really very high chances of having more than 50% of the revenues coming from this product. Okay, if I achieve this, then essentially, you know that you, so much into this game, into this transformation, then you can start, you know, extrapolating whatever way.

And you know that Philip Morris will become fully smoke-free company. There is another aspect of that thing, which we also have shared with the public. I think in the next five years we can generate the first billion of dollars coming from the products which have nothing to do with the nicotine of tobacco. Because once we've been developing a product like ICOS really develop a lot of internally a lot of expertise about inhalation, right? So how the inhalations, how the respiratory system works in a human body. When it comes to the tox assessments, you know, depends which substance you inhale, what impact does it create for your lung.

In terms of the efficacy, if you inhale a substance, how quickly that substance is becoming, biologically available in your bloodstream, right? So our idea here is that we can take some well-known substances in the world of pharma, and by changing the way of administering these substances to the human body, we actually can have a positive impact on the quality of life, maybe morbidity, maybe mortality. They are conditions where the time from the moment when you're

take the medicine to the moment when that medicine is active in your body, is doing a job in your body, is of a critical essence. Take, for example, the situations when you have heart attack, right, or any cardiac arrest. You know, there are some medicines which are being giving you, you know, the moment when the ambulance arrives to help you, but the way they are being administering to your body is usually for the digestive system. In a digestive system, you work through the digestive system, you wait for the bioavailability

of a given substance for 20, 40 minutes or longer. The same substance delivered through your respiratory system, i. through your lungs have a bioavailability in 120 seconds, so two minutes. So this definitely has an income, you know, the outcome, that drives the positive outcomes. So you say there's a company which started as the cigarette and we're definitely the global leader here and we have a great brands and a lot of local brands like in Indonesia, etc. We know how to make the top quality cigarettes. We know that we need to address the problem of a cigarette of smoking.

So we're going to the heat not burn and other alternatives, but all with the objective of significantly reduce than exposure and help consumers if they don't. sweep if they don't quit to definitely go to this better alternative but then you know you develop capability in the company which you realize you can use for many other purpose so I just give you know a couple of examples but it's really very exciting that you know your opportunities we didn't have that opportunities you know in front of us five years ago because we didn't have a capability now we have a capability all of a sudden the world gives us this new opportunity.

When you launched this new product about six years ago, you decided to launch it in Japan, right? Yeah, you need to... Why was it Japan out of curiosity? Yeah, because you need to start somewhere, okay? This is the proper answer to this question. Look, we operate in so many markets, so ultimately you know that, and then the product is designed, this and other versions of the product are designed for the purpose to make them available, affordable, understandable to essentially one billion smokers, all smokers, which are there in the world. So, you know, then you need to start summer, so you go into the market where first it's easier for us, we have an infrastructure, we have a sizable component. a combustible business, from a trade channel perspective, you have a convenience stores, you have a digital,

you have a vending machine, so it's a complexity in which you also want to test it, and it has to be sizable, so you really try to run the experiment at scale. So we did it. We started actually in one city in Japan, and about a year later we expanded nationally. At the same time we opened one country in Europe, was Italy in the city of Milan and we also run the same test.

You know, when we are going to the market, the marketing research, researchers which we had available at the time were giving us a conversion rate, if I remember somewhere in the 30 plus percent, which means from 100 people who will buy the product, 30 plus percent will fully use this product, which means they will stop smoking cigarettes at all. when we went with the, and this was enough for us to press the button and said, okay, we start and on the go, we will start improving the product. Actually, when we launched the product, the conversion rate shot up to 60 plus 70%. Now in many markets we have the 80 plus percent, which is unheard of rate of conversion with any alternative products. If you take a smoker, you give him or her one of the alternative products,

how many of the smokers will fully stop smoking cigarettes, I will just go to this product. And so ICOS is really spectacular on this one. So, you know, we've been encouraged by the research, right? But this is, you know, always sort of artificial setting and absolutely overwhelmed by the, in a positive sense, by the success in the marketplace. Obviously, if you go to...

to the markets like, I don't know, take Indonesia, right, when you have such a... Right. Which is the largest in the world, right? It's the largest in the world, but, you know, you have the taste of the product is different, the Kretek, but working on addressing, you know, the Kretek taste directions in our product. So you will hear more from us. Nothing is easy, as always. Sure.

And everything takes time. But another learning from organizations like this is that there's always almost the same amount of time which you need to devote to solve the problem. So the question is how quickly you will activate the clock. Because the sooner you admit that you have a challenge of the problem, the time starts running. And if something to be solved takes the two years, it's always two years. So, you know, the whole art is how quickly you put the, you know, you leave the stage of denial or avoidance and you, you know, talk openly that this is a challenge, this is the problem and I need to have a solution. You put the resources and, you know, sooner or later you will have the solution. So it's very critical, you know, to admit where is there, you know, very often companies will try to defend the business model or the trends, etc.

they completely missed the boat. I mean, we all have heard about Xerox, right, in the past, which means the big thing. It's not that they didn't know, that they just didn't want to accept the fact that there was something else which may completely ruin that business. I mean, it happened to Nokia, right? Yeah. I mean, there are many other companies. Oh, they used to make tires, right?

And they made handphones. Yeah, so it's not that, exactly. So it's not the situations when you're taking by surprise, you know, with the phenomena, which was not known to other people. Everyone knew about this whole thing, but only a few people were acting and the other people didn't want to accept that the world is changing,

the technology is changing, gives you any opportunity, and you really go and adopt it. I mean, look how much time we have lost on the climate conversation, right? I mean, the first five, ten years was the classical stage of denial. Science is not conclusive and, you know, everyone.

Well, there's still quite a lot. denying yeah yeah yeah but look that's the worst right which always happens to us right humanity that we look change is not you know is not a fun change is not you know never comes with the pleasure from a day one but denying a change actually comes with a lot of pain i mean i have today we have today even you know the markets where people don't want to recognize that other smoke-free alternatives, non-combustible alternatives, are better products than a cigarette. And, you know, okay, we have to keep on having a dialogue,

have a conversation, talk about this whole thing. But, you know, telling me today the diakos is the same as the cigarette, it's like telling me that the earth is flat. And, you know, this is not the, you know, it's not a fun in a sense that they are smokers who, if they would have access to information, if they would have an access to the product, can make their decisions. I mean, a human, at the end of humans,

at the end of the day, are making a lot of ride, a lot of smart decisions, providing they have all access to the information, they are getting educated, they are being explained, etc. So this is where we are. So the stage of denial, I mean, you know, we always waste the time, okay? and this is the only thing which frankly speaking you never can get back because you know we are

living longer but you know each of us have its own life expectancy whatever it is 80 90 hundred 70 years but this is a very there is the definite amount of time which you have in front of your right for your life and you know you can waste other resources you can you know lost money you have to go and i don't know the companies go bankrupt you can resurrect as the company you know, from the bankruptcy. You can get another financing from external parties and so on. So money, you can recover.

There is a path to recovering the financial resources, but there is no path to recover the time. So lost time is a lost time. Sure. Sure. Now, if I take a look at the global figure, right, there is about, what, 2.5 trillion cigarettes that are being consumed

on a yearly basis, right? Indonesia makes up about 10% of that give and take. Yeah. And I think it's quite encouraging in the sense that, you know, you have boldly made this effort to repurpose, right? I just want to inquire a bit more here. If you were to reach that target by 2025 of attaining 50% of your numbers

related to smoke-free alternatives, right? When do you think you'd be able to reach 100% smoke-free alternatives? Because that would dovetail in a good way, in a more healthy manner, to the globe, right? Yeah. Particularly to Indonesia. Well, first, if we want to, if my dream is to come through that in 2025, we'll have 50% of my global revenue coming from products like I-Cost. And definitely, Indonesia has to play the role there. But we knew it.

And there was no point that despite the fact that I have a very successful cigarette business in Indonesia. And I think we are not only the key player in our industry, but frankly speaking, the footprint of the tobacco industry in Indonesia is so enormous that there is a significant contribution of tobacco industry to the Indonesian economy. that the fact that we know that we can do today the better cigarette and on the other hand having this, you know, a successful business in Indonesia that we should deny Indonesia access to this product, actually quite opposite. I think it's, you know, our job to bring that product to Indonesia,

end up with the right, you know, surround ourselves with the right support groups. And I think there is a lot of people in Indonesia today that they do realize that the faster this product get into the hands of the smokers there the better it is for all of us and you know we need to on the way take care of the tobacco growers you know make sure that you know the machine will uh will have a you know a positive future and you know equally rewarding future as it had the rewarding past with us i think obviously the there are things which Philip Morris or San Poirna have to do.

They are things when San Poirna or Philip Morris will need the supporters, will need the help with others. But I think it is all that available. But it is all doable. When we will go fully smoke-free? I think it's, okay, we have said that our ultimate aspirations is to become fully smoke-free. But you need to translate it into something which is attainable, digestible, so you're breaking this big objective into a series of a milestone.

As I said, six years ago we had zero, then we had 25, another five years, which, by the way, is four and a half years to be very precise, to go, 50%. If you get to the 50%, you know that you have achieved so much which was completely, you know, to some on a table at that time, that, you know, you're unleashing an hour, you know, the territories of a capabilities in a company which, you know, can serve you there.

So if you go to the 50%, yes, you will have a 75% and 100%. I actually think that this is a moment when we will be confronted, and actually I would like to be confronted with the interventions from the governments. Because if you think that, you know, So the benefit of a going smoke free is not only benefit to Philip Boris, is the benefit to the smokers, it's a benefit to the society as such, right?

If we all agree that smoking creates all the harm and is there some sort of, it has a negative economic impact, etc. So going on smoke, I mean a number of the stakeholders in this very broad ecosystem will or should benefit. I think that in the next five years I will have a first country, so the governments, who would like to establish the gliding path to the zero on the combustible cigarette, while only allowing the alternatives to be in the market. You know, and the first time when I talk about this, when I said this whole thing,

you know, people were almost rolling their eyes, right? I mean, why this should happen? And I start showing them or reminding them about the examples we've already been confronted with, at least in the big parts of the world. So very few don't remember, very few actually remember that, you know, in a past we all had this electric bulbs, right? The light bulbs would you have in your factories,

in the offices, etc. Technology at that time was, you know, highly energy-consuming. You know, we all have agreed that we should preserve the energy or useless energy, but we didn't want to live in a dark. We continue, we wanted to have our houses light, lighted and the factories, etc. So technology came, which offers you the same quality and the intensity of the light, but with much less energy. You know, the governments have done in a European, many other countries essentially, in most of the countries in the world. They banned the old technology, they only allow the bulbs, the light bulbs with the new technology to be solved.

Historically, you may recall, there was the issue about asbestos, right? Asbestos was, as a material, had a lot of applications in a construction industry, in the automobile industry, many other industries. Asbestos as a material was doing a job, right? I mean, there was a purpose. There was the reasons why the asbestos was used. Then we learned that asbestos is highly carcinogenic. That we invested in a technology.

The job has to be done. material is bad, can I invent a come up with a material which can do the same job but doesn't create all of these carcinogenic particles and so on. The moment when this has been done, technology was there, the technology was validated. Science has confirmed that this material doesn't create all of these negatives and so on. Guess what we did? We banned asbestos, essential in the most of the countries. So I actually think cigarettes might go into one of these routes, one of these roads that, you know, we know that, you know, banning a cigarette is sometimes

banning a cigarettes. You know, sometimes people ask me why Philip Morris wants to go smoke free or stop selling cigarettes. I said, okay, and I stop selling cigarettes and what we're going to achieve. They are competition. They are competitors. They are illicit products, et cetera, et cetera. The only thing is you will demand is there.

Supply will be reallocated to somebody else. So it's not about me, you know, making some heroic type of announcements and nothing's going to change. Okay, you could think that the industry should stop selling cigarettes. Okay, this is as long as you control the market, you don't have a illicit, etc. Because remember, there is a demand on the other side. And how do we satisfy demand? This is what we're debating here.

But I do believe that if you start giving people options, and insist that this is a better options, I encourage them actually, better work, that there is a better option, that look, stop using cigarettes, move to this alternative, or quit smoking if you can, but if you don't, I mean, go if you wish, but if you don't, go and apply this products and then put more and more constraints on the combustible business, including one day, I don't know, 10 years from now, you can say this and no cigarette sales allow. UK has a couple months ago, right, announced not the only country that they will allow the sale of the combustible car engines only by 2030, if I remember. So, you know, that's sort of the thinking that the better product has to replace the worst product and the worst product actually has to disappear from the market is a very sensible to me a solution.

But then obviously requires a very serious conversation. Okay, what do you do with the factories? what you do with the growers, what you do with the trade, who will be impacted to the extent, and what are the mitigating strategy? How much of your top line are you actually allocating for research and development so that you could actually pivot to more of these alternative, you know, non-smoke or smoke-free products? Well, our entire sort of annual research and development budget is almost a firefighter. million dollars level and 99% of this budget is behind this product.

We essentially not invest any R&D for the combustible products other than just statutory type of requirement, which is, you know, depends on a country, tar nicotine measurement and that's it. All innovations, everything, and all capabilities, not just the dollars, but the humans, right? The scientists and so on. The specialist is going this product behind the reduced risk products. products and soon I will start investing into the products which goes beyond the nicotine. This is even more because three quarters of my total commercial spend on a global basis today

is spent behind the new products. You know, I have a 25% revenue coming from a new product, but I spend 75% of my commercial resources behind this product. Right. Because I believe this is a product which, you know, makes sense to invest. invest into is a much better proposition, as I said, for a smoker, for a society, for investors, all the other shareholders. So I'm seriously, I'm very convinced that this is the right thing to do. And, you know, smokers, as I said, we are so much encouraged by, you know,

smokers in many countries. So when they have an opportunity to, you know, to try product like ICA's, but the other products in the categories as well. And they actually take this effort for and they stay and, you know, we have a lot of great stories when people were right to us smokers, right, former smokers, because now the Icos users. You know, when people are using the language, the Icos changed my life. That's really touch, yeah? That's, that's, that. Yeah. You know, you, a good chunk of your organization relates to manufacturing, right? And, and we, we, we, we, here of, you know, robotizations taking place within the manufacturing spaces. What is your view, just out of curiosity, in terms of, you know, the repercussions going forward

on the social context, right, at the rate that, you know, people are actually getting replaced by robots? Do you have any view about this and how you actually maintain balance between one and the other? Yeah. So that there is no disruption, there is no dislocation. Just on record, right? Just I put it straight on a record. I don't want to be replaced by a robot.

Okay, that's me. I don't mind a robot sitting next to me and, you know, helping me with, you know, some of the tasks, analyzing data faster, seeing the things that maybe my brain itself will not see it, but with the help of some, I don't know, artificial intelligence, et cetera, we could really process the things faster, etc. There is the whole role in automations and the robotization. I mean, if you look at the effort which the average worker had to take physical effort, have to do, I don't know, 30 years even in our factories versus today,

I mean, a very many of the jobs which was about, I don't know, lifting the heavy materials, transporting heavy materials, that sort of the things have been one way. another automized. You know the forklift is the step of automation, right, of the very simple task of lifting an object and moving from a place A to B. I mean, it sounds maybe crazy for some of the people, but this is where you open yourself to what the technology can bring. But I don't think the question is about the automations or the robotization, which is replacing human. It's more finding the way where the humans can benefit from the fact that, you know, our life can be easier and we can achieve more

or, you know, do more things at the same time, that sort of avenues. I actually think that, you know, the whole life is about how you achieve what you want to achieve with the minimal effort, right? Right. I actually think that, you know, lazy employee is not a better employee as long as he or she will do the job. And it's nothing wrong that we are lazy. because the laziness actually forces us to improve the things, right?

It gets smarter, yeah. Exactly. So, you know, laziness as such has this negative sort of connotations or you are lazy. It's not about that. I mean, if my objective is that I, you know, I want to do my job in a fastest possible way with the minimum energy involved,

this is what we should actually promote and reward. But again, Robert replacing me, Where is then my phone? Not a chance. Where is there my phone? But I have a big desk. I can put one more chair for the robot sitting next to me. Jointly, maybe I can, you know, I have to work less hours.

Let's see. Would you consider your organization as one that is on the curve in terms of empowering artificial intelligence as compared to your competitors? Yeah, I mean the aspect when you start looking and you start applying the artificial intelligence, but look, especially now when we're going through this massive transformation that, you know, the classical combustible cigarette business is very much business-to-business type of a setup. So you spend a lot of time on building a relations with a wholesalers, with the retailers, have a right presentations of your product on a shelf, but then the relations with the consumers are very anonymous, right?

You just do some sort of general communication and, you know, depends on the country and the regulations. You have, you know, some billboards, you run some activities, et cetera. It's a part of our vision to go to smoke-free and offer non-combustible products. We also decided to somehow be a part, a significant part of relations with the consumers, their relations with consumers. So obviously, you know, the consumer, each consumer is different, right? So you have almost infinite number of the sub-segments, which allows you to better understand the consumer needs. So you almost go to the personalized, if you like, at marketing.

And, you know, obviously here you have a pattern, so you can cluster these consumers in a subgroups, and this is where the role of the big data analytics, Also, you know, artificial intelligence comes to play that, you know, the system, solutions, algorithms, etc. can help us achieving our objectives faster. But this is a part of the transformations. Now in a different, you know, you can take the aspect of the employer relations. You know, on the worldwide basis, on a global basis, we have 80, almost 80,000 employees.

We also try to get better in understanding the individual employees' needs, right? So you can also start applying some sort of these solutions into Qatar better, to respond better with, I don't know, benefits to sort of a program to employees. As you know, I mean, in many countries we have a lot of relations where it actually, you know, sizable relations with the farmers' community. i mean we're running experimental farms today in brazil which allows us to grow tobacco two three times a year on the on the farm when we're taking an advantage of the farming conditions but also apply quite a lot of technology in order to you know grow this tobacco with the minimal

if possible impact on the environment we have a drones flying over the tobacco farms with imaging recognizing any potential diseases developing on the tobacco plant and we can deliver the active agents to cure the disease with the precision of the one plant so you know you obviously have the huge you know benefit of using less much less of the crop protection agents it's obviously lowering the cost has a much much lower impact on the environment and so on but actually you know drastically increasing the yield, how many kilograms of a tobacco the farmer can produce from a hectare of land. But in order to get to tech technology, you know, you need to invest in a digitalization. It's not just the technology that the drone with the high-resolution camera flies over the field.

Somebody has to teach the system how to recognize the specific disease and what are the observable by the camera changes in color, for example, of the leaf, which will with the very high probability indicate that there was a disease on its way. So you have many of these applications. You cannot really, you know, some companies think that you can just impose digitalization on the company of operations.

I think actually you need to, it's not about the you allowing or not, right? because you always, as a company, if you want to stay on the top of the game, you always have to be the best in class, whatever you think is the core to your business. And technology or use of technology can give a lot of advantage. So either you grab that advantage and you continuously stay on the top, or your competitor will take it and you can become obsolete. So it's a part of the game.

So whether you like the digitalization or not, it's completely. completely irrelevant. It's like you cannot run the business today without using computer. But you know when I started 30 years ago you had one or two PCs in the office and this was the magic and everything was on a paperwork. And look, I am still a fluent in how to use calculator. When I talk to my 14, 13 years old son, he just first doesn't understand why you need the calculator because iPhone has it on. And on the top of this, he figured it out that you don't have to press buttons on the iPhone building calculator. You just ask Siri how much is five-five-seven. So it's a completely different world. I'm not unlike you.

I mean, I'm very much like you. I used to be an accountant too, and I still use a calculator. You know, the commonality between you or PMI with other successful companies would be that, you know, you all spend a good chunk of your resources on research and development. And that allows you to pivot, unlearn and relearn and repurpose. And that's how you make yourself a sustainable, you know, going concern. So historically, if you look, look, it's Philip Morris. He's a publicly traded companies.

We had all our responsibilities to our shareholders and generate their returns, et cetera. And I think the really big decision was that, you know, historically we start curving part of our resources, investing into the science, something which we never know at that time, whether we will be successful. We didn't know at that time, even if we are successful, when we will be successful, for how long we need to invest. All of these things were, you know, the set of assumptions. But, you know, you had the courage, you had this entrepreneurial, spirit and I think we played very well because you know for all of these years of a heavy investment behind this product we paid the regular dividend to our

shareholders what more important we actually increase the dividend year on year so we tried to do all of this investment phase and a transformation and as much you know quote-unquote immune our shareholders from you know the fact that we're changing that model it may require you know some investments up from. Actually, we had a very good reception, great support coming from our investors, at the moment when they learned what this innovation is about, there will be years of investment. Actually, we get a lot of encouragement from them to really run that business, run that company in a long run for the long term. And we know that we're doing a right thing.

and, you know, you have, if you have that perspective, because again, you see where you want to go. And you're really sure that where you want to go make sense, that this is what I want to achieve. This is my ultimate objective. Then all of your decisions are becoming, you know, a bit easier. Because you see this perspective, right? So in the moment when we said we want to go smoke-free.

And I think this is what differentiates still, Boris International from many other tobacco companies that we're not offering this product as another extension of our cigarette portfolio. We actually encourage smokers to switch fully to this product. So we actually don't mind at all. Don't mind at all if Marlborough, GSM, or whatever user, smoker will completely stop using this product

and move to this product. We actually think it makes sense again from a smoker's perspective, from a company perspective, for the population as such at large. So, and that, you know, but it sounds like a very, very small difference versus how the other play today. We've come to the last question of our interview or chat here. And this is typical or characteristic of what we typically talk about, the end game for Indonesia or the world in 2045, right? And one of the few things that we've liked to talk about is the climate, right?

And how do you think we should get the Gen Z members excited about not only conversing, but also doing what's necessary to keep the planet, you know, as healthy as can be? Look, every generation has the big role to play, right? Each of us individually, but I guess seven plus billion people, I mean, each of us have a role to play. I mean, I don't think it's as, unfortunately, things are not as simple as one could wish. So we usually try to approach this problem through, it's not me as others, right? It's you and you should change. I am okay.

Industry should change. You know, we put a lot of pressure on the... oil and gas and the energy companies. And rightly so, I think every company has, you know, right pressures from the, from its shareholders, stakeholders, etc. will help them going through this change. But it's also us, right? I mean, we're using the energy. It's not oil companies which are using the energy.

We're using the energy so we can help something. Look, one of the small issues which we have in additions to the harm created by small companies, smoking in our business is a cigarette butts. Okay, cigarette buds are not the main pollutant in the oceans and the waters, etc. But yes, I mean, we shouldn't have a buds in this place. Now, we're not throwing these buds on the street, right? These are the smokers who use the product and extinguish the cigarette on a pavement

and leave it there rather than a disposed in a way that, you know, the cigarette. but can be neutralized or reprocessed or whatever. But, you know, we have a program when, you know, we try to, it's difficult to say, okay, the smokers, is to make them more sensitive, right? And we run a few of your campaigns more as on a test basis so far, but, you know, then COVID came, et cetera. So quite rightly our attention is somewhere else, but we had this a tagline. The world is not the astray, okay, or the earth is not.

an astry. So don't throw these things. And you know, we know how to behave at homes, right? It's always you know, makes me you know, we're thinking that, you know, we will not throw on the cigarette butt on the floor in your house, right? You would not do it. You will presumably

have an astray, you will dispose of this whole thing. So what changes in you when you go outside and, you know, you start acting differently? Is it because you don't recognize it as your ownership? So I think a part of the education would be that I know that the globe, that the Earth is a very big planet and it's difficult to imagine that we all own it, but actually we do.

Okay, and if we allow that, you know, water is for free, air is for free and, you know, all of any other resources are for free and it's, you know, I can do whatever I want and they use the, you know, whatever way I want. I mean, a collateral, 7 billion people will make the difficult. is very complicated here. So I think it's, because what I'm saying is, you know, this population is all about the, this generation,

sorry, it's all about the education. But we need to, we need to, sure. But it's a little bit also like with a government, and, you know,

you could see that in some countries you have this a populistic type of, you know, of the directions. Oh, yeah. But, you know, I think, you know, somewhere in the educational system, okay, I'm not saying that you have to go and attend the highest university or whatever, but people have to be explained one thing.

The government cannot give you more that you gave to the government. Okay, if the government start giving you more that we collaterally, you know, giving to the government, there is the question, where is this coming from, okay? And sooner or later somebody has to pay for that thing. And I think the same principle applies from, you know, how you manage the sources and, you know, what sort of a life you're living on the earth. The derv will not give you more that you're giving to derv, and that's the problem. So you need to take this ownership and realize that there is a mutual relations. And we as the human species, you know, we think that we dominate, but I'm not sure we really dominate. All right.

Very good. Thank you, Jasek. Thank you. And let's keep in touch. Thank you so much. Have a great rest of the day. You too. Take care.

Stay healthy. Teman, teman, that's Jasek, Klausek, the pinpinan from Philip Morris International. Thank you. Endgame is a podcast

by the School of Government and Public Policy Indonesia. The first Indonesian policy school to offer a full-time master's program in English. and is a production of the cinema, Indonesia's award-winning entertainment and technology company. Oni Jamhari and Anga Duima Sasonko are our executive producers.

Ahmad Zaki Habibi and Jimmy Kuntoro are our supervising producers. Hannah Humaira and Farah Abida are producers. Bobby Zarqasi is our director. Aditya Dema Pratama is our director of photography. Video editing by Felicia Wiradiadian. Alvin Pradana Susanto is our sound engineer. Ratri Pratiwi and Vera Rachmawati are research assistants. Aulia Septiadi and Ferdisal Obdama are our graphic designers.

Transcriptions and translations by Isfi Afiani. The song you're hearing is by Neil Giuliarso, Ferdinan Chandra and Philippus Chahadi, mixed and produced by Gibran Wiriwian. The production of this episode adheres closely to the local authorities' health and safety protocols.