FUTURE FIT
Challenges organisations face today outstrip the tools of the past. Consider managing innovation and growth strategy in an uncertain world. War, inflation, pandemics, inequality, climate change, a commodity crisis, and political polarisation. Back in 2020, Kristalina Georgieva, the Managing Director of the IMF, noted “If I had to identify a theme at the outset of the new decade it would be increasing uncertainty.” Today many are saying that the global business environment mirrors that of 1914 prior to the start of World War I. When we lack a clear shadow of the future, particularly in the current geo-political climate, we turn inwards, batten down the hatches and hope to ride out the storm. Still preaching disruption while holding on to the notion of stability with white knuckles.
How were we so blindsided? For the last forty years the idea of greater global economic growth with less conflict and ethnic strife was an inevitability. Neo-liberalism would bring peace and prosperity driven by open markets, free trade, and cultural exchange. The idea was that as nations developed, the world would flatten, and opportunity would spread. And this was largely true. Globalisation has brought more than a billion people out of poverty in the last thirty years, and until recently, promoted political freedom nearly lockstep with economic freedom.
Yet even prior to COVID or Putin’s invasion of Ukraine the basic assumptions of globalisation have been eroding. According to Freedom House the world has experienced 16 consecutive years of democratic decline.(1) The Economist reports that between 2008 and 2019, world trade, relative to global GDP, fell by about five percentage points.(2) Global flows of long-term investment fell by half between 2016 and 2019.(3) Last month the IMF had already dropped global growth projects for 2022 by nearly one percentage point - from 4.4% to 3.6% - with a significant rise in projected inflation. (4) In the United States, trust in the national government has declined from 73 per cent in 1958 to 24 per cent in 2021.(5) Europe has seen a similar steady decline in public trust. The world is not converging anymore; it’s diverging.
We have completely underestimated the power of parochialism and nationalism to hijack globalisation. Part of why we have been caught unawares is that we fell into what Yale historian Timothy Snyder calls the politics of inevitability - "A failed sense that the future is just more of the present, that the laws of progress are known, that there are no alternatives, and therefore there is nothing really to be done."
In the US version of inevitability, market capitalism will drive democracy and this combination will bring happiness to all. Economic inequality, rising nationalism, and other externalities are ignored, for the politics of inevitability resists facts. In the European version, the continent moved from feudalism to nation-states that learned that war was bad and peace was good and therefore, economic integration will lead to prosperity and peace. “Wandel durch Handel,” or change through trade, as the Germans called it. In fact, as we've seen, European idealism driving integration politically, economically and socially is frankly (prior to this war) exhausted. On the other hand, if we look at Russia since 1991, there hasn't been a politics of inevitability, but rather a politics of victimhood. Nilpolitik, to coin a phrase. And this has been Russia's strategic advantage. At home the Kremlin under-promises and under-delivers, thereby creating a depoliticised society at home. "No one is responsible because we all know that the enemy is coming no matter what we do.” said George Orwell in 1984. This provides resources and focus to dismantle the seemingly weak inevitable narrative of the United States and Europe, while bolstering their legitimacy back home. Wily, as defending the motherland is the only promise the Kremlin has made to the Russian people.
Nilpolitik exploits the West's perennial weaknesses (ideas over nationalism) by appropriating postmodernism from the West. "Nothing is true and everything is possible" or "There is no floor and there is no ceiling," as contemporary Russian sayings go. Distinguishing between truth and lies has become passé. So they poke the West like the teenage sibling who starts questioning the existence of Santa Claus or the Easter Bunny in front of their toddler brother. It is postmodernism at its finest in that its power, as the historian Tony Judt put it , is precisely its "insistence upon subverting not just old certainties but the very possibility of certainty itself."(6) The lack of a clear truth creates fear, uncertainty and doubt. And as any market watcher will remind you, "Nothing is worse than uncertainty for economic growth." When you have a national narrative based on a promise of certainty and inevitability, it is ripe for exploitation through soft power politics backed by the hard power of hydrocarbons and military strength.
Do you remember, before the internet, that people thought the cause of stupidity was the lack of access to information?
Yeah. It wasn't that.
And in the age of the internet, it has been easy as pie to create chaos, uncertainty and self-doubt through mis-information, troll farms, bots and hacking . What was supposed to be a global village more often resembles a kaleidoscope of counter-intuitive confusion. The result has been a systematic de-politicisation of the electorate. Not only in Russia or the United States, but globally. "What can we do?" "Everything is fake news, you can't trust anyone!" "They're all crooked, it doesn't involve me." Rationality becomes completely meaningless. A de-politicised electorate in a world of uncertainty creates a worrying void, for as history teaches us, evil will prevail if good people stand aside. Online, it is not so much a fight of good against evil, but of good against "meh."
Alarmingly, this wilful detachment is growing, and not just with the average voter, but in the private sector as well. In the past the belief from the boardroom was that democracy would always prevail, but today the choices of firms are also becoming means-end rationality.
As de-politicisation marches forward in the political sphere, back in the corporate office, we're seeing a similar rise in dis-engagement. In the United States, 710 million hours per week are spent on internal compliance activities such as budgeting and planning. That’s 16 percent of our working lives. (8) 15% of an organisation’s collective time is spent in meetings, a percentage that’s gone up yearly since 2008. (9) People spend 58% of their day doing “work about work,” including communicating about work, searching for information, switching between apps, managing shifting priorities and chasing status updates, according to a new survey from Asana.(10) As a result, only 16% of employees are fully engaged at work, while 84% are just going through the motions, according to a Gallup study.(11)
Humans are brilliantly designed for an older, less connected, and more predictable version of the world. The brain evolved to not see what we see now, but what we saw in the past. We are hardwired to quickly find certainty, to prefer useful perceptions versus accurate perceptions. Because it's easy to die. Think back a few thousand, or even, a few hundred years. You live in a nice safe village, plenty of food and water, but you are curious what is around the hill. What a stupid idea that would be! Because by going around the hill, you’ve just increased the possibility of dying because dying is actually really easy back then. These biases towards safety and predictability are deeply woven into our cognitive faculties. So in the face of fear, uncertainty and doubt we shut down, focus inward, and embrace ignorance. It is not crazy. When you walk in a dark room do you walk fast or slowly? We do the same in politics and business.
So how do we overcome these constraints and thrive in an uncertain world? How do we reverse depoliticisation and disengagement?
The first is to recognise the constraints we want to overcome. Nobel Laureate Daniel Kahneman, notes that we get stuck in a memory loop and can only predict the future as a reflection of the past. 90% of what we believe we see as a new perception is based on past experience.(12) Kahneman calls this our “narrative fallacy” – we see the future as a slight variation on yesterday’s news (also known as Bayesian Integration). Moreover, we are not just focused on the past, but we are also caught in silos of culture, political orientation, language, group think and all more than ever before in the path dependent nature of the internet. This is both at the individual and organisational levels.
Specifically, to take control over our relationship to uncertainty and create an awareness over the horizon, leaders should:
a) Take Control of Your Inputs. We must broaden our sources of information to the world around us. Get out of your current functional, professional and geographical disciplines. Time and time again we find the greatest insights are derived when we change how we see the world. As Alan Kay said, "A change in perspective is worth 80 IQ points."
b) Sensory Teams. Create cross-functional "sensory teams" to continuously scan, discuss and learn from your horizon scan. Give them the autonomy to develop their own conclusions, but aligned to one organizational question, e.g., "In the next 18 months how will the political, economic, social and technological drivers in Southeast Asia impact our business?"
c) Culture of Learning. Promote a culture of learning, sharing and rapid prototyping ideas by budgeting the time for this activity and create a commensurate reward system for this work.
d) Scenario Planning. Intentionality is not enough. You need mindsets and methods. Use regular ongoing scenario planning sessions to take the first three points to wind-tunnel your current strategies and ensure that they are resilient to the most likely futures over 12, 18 and 36 month timelines.
The key is to remember that strategy is not a state, it is a practice. To make our way ahead under uncertainty, we have to be constantly scanning the external horizon, identifying our blind spots, bolstering our weak ones so that we are prepared to take a proactive posture to lead the future.
1. Repucci, Sarah & Slipowitz, Amy. "The Global Expansion of Authoritarian Rule." Freedom House. February 2022.
2. The Economist. "Globalisation and autocracy are locked together. For how much longer?" The Economist. 19 March 2022.
3. Ibid.
4. International Monetary Fund, "World Economic Outlook, War Sets Back World Economy 2022" Occasional paper (International Monetary Fund. 2022.
5. Perry, Johnathan. "Trust in public institutions: Trends and implications for economic security" United Nations Department of Economic and Social Affairs. 2022.
6. Judt, Tony. Postwar: A History of Europe since 1945 7(New York: Penguin 2005): 479.
7. The Economist. "Millennials across the rich world are failing to vote" 4 February 2017.
8. Dignan, Aaron. Brave New Work: Are You Ready to Reinvent Your Organization? (New York: Penguin Publishing Group, 2019)
9. SAP Concur "Are meetings costing your business too much money?" SAP. 17 January 2017.
10. Asana "Embracing the new age of agility" Anatomy of Work Global Index. March 2022.
11. Herway, Jake "The Hidden Earnings Potential in Matrixed Organizations" Gallup. 8 March 2019.
12. Beau, Lotto. Deviate (New York: Hachette Books: 2017)