Runaway World: How Well Prepared Are You?

Two decades of relative peace, institutional stability, and dramatic economic growth now seem like ancient history.

Was the period between the collapse of the Soviet Union and the onset of the global financial crisis (1989-2007) an anomaly?  Geopolitics were stable under a global hegemon, the global economy grew at a rapid rate as China and other emerging markets experienced dramatic national economic development and drove intense globalization, and the appeal of authoritarianism waned in most countries around the world.

These days, alas, we seem to have reverted to a “runaway world”—a phrase popularized by Anthony Giddens’ 2000 book of the same title, but even more prescient now. In traditional spheres such as politics and economics, leaders are struggling to keep up with forces that are familiar to us. Geopolitics are back with a vengeance.  Regional conflicts are flaring.  Terrorism is on the rise. Deeply frustrated publics and turning to non-conventional and even extremist positions. Democracy seems to be withering.  Protectionism is gaining traction. In non-traditional spheres such as emerging technologies, leaders are grappling to deal with forces with which they are not familiar, and are hardly able to keep up. Obviously all this has profound implications for the global strategic operating environment.

In a recent forum of CEOs convened in Warsaw by A.T. Kearney's Global Business Policy Council (see here), we identified four areas in particular that are undergoing convulsive change. Geopolitically, new tensions and outright conflict—in both the traditional and cyber realms—are flaring in many regions of the world. Economically, the global economy continues to experience lackluster growth, profound fluctuations, divergent national policies, and widening income and wealth gaps. Technologically, exponential advancements are rapidly and irrevocably changing the commercial landscape and our daily lives. Socially, growing disillusionment and discontent among citizens are translating into the rise of populist and separatist movements and protest politics.

Many of the challenges facing leaders today are not entirely new. These trends have been building for decades and have their roots in a variety of lingering policy challenges that have never been fully addressed. Now many of these issues are coming to a head.  Other challenges, superimposed on the familiar, are new and extremely daunting.

In this “runaway world” of economic and political volatility, growing geopolitical tensions and terrorism, and the relentless disruption of technology, citizens are looking for certainty and a return to simplicity. Aspiring populist leaders are taking advantage of citizens’ unease by promising what they cannot deliver. But those who have been in power in government and business are failing to offer the masses a viable, passionate counter-narrative.

With this perspective, we found that what is more surprising than recent developments is actually how surprised we have been by many of them. Individually, all of these indicators of volatility and change will have a remarkable impact on the global operating environment. Together, they have an effect that is nothing less than convulsive. How can and should leaders operate amid this sweeping upheaval? How should they position their companies for upside developments while at the same time mitigating the constellation of downside risks?

While there are no silver bullets, a few things are crystal clear.  First, leaders have no choice but to be strategic.  Failing to constantly assess the changing environment is the equivalent of an organizational death sentence.  Second, companies need to plan for additional future pressures on governments that are by definition poorly equipped to address the current circumstances--let alone pre-position for future challenges.  Third, despite the vast quantities of data and our growing ability to engage in analytics, our track record in prediction/anticipation is awful.  This implies that traditional techniques and practices--such as scenario-based strategic planning--are still worth their weight in gold.  Finally, constant 360-degree vigilance is not an option.  It is critical to navigating in the runaway world around us.