Stability, resilience, and relationships are the keys to thriving amid geopolitical crises.
A glance at today’s headlines leaves little doubt that we have entered a new era of geopolitical turbulence. Acts of terror and violence, humanitarian crises, and public health emergencies are rarely localized events. Instead, these shocks transcend borders, presenting global challenges. Just as one crisis fades, another rises to take its place. Adding further complexity, today’s enemy (unlike in that previous period of great geopolitical uncertainty, the Cold War) is often unseen or unknown.
For company leaders, then, geopolitical uncertainty raises critical questions: How can you make decisions, particularly long-range investment decisions in far-flung parts of the world, when so much is in flux? How do you lead your organization through ambiguity to success?
Corporate leaders cannot give up the need to grow. But they have to take ambiguity into account. In essence, the right approach is focused on sustainability. Company leaders are asked, by their employees, customers, or society at large, to “give back” by supporting charitable causes and the environment. But the same companies do not pay enough attention to becoming more sustainable themselves.
Sustaining a business in uncertain times requires executives to prioritize stability, resilience, and relationship management. Developing these executive practices won’t shield you from crisis, but it will help ensure that when the dust settles, your company is not just standing, but moving forward.
Preparing for the Worst
For the foreseeable future, volatility and ambiguity will continue to define the geopolitical landscape. Fortunately, companies can survive, and even thrive, in this environment, by focusing on the following three approaches.
- Strength through stability.It isn’t easy for many business leaders to recognize that the pursuit of rapid growth for growth’s sake, a business preoccupation since the Industrial Revolution, is counterproductive today. In fact, it often leads to business failure.
Undisciplined growth in a time of uncertainty results in unintended consequences that will limit your company’s success and potentially curtail its survival. Leaders must become much more purposeful about the type of growth they pursue and the reasons for such pursuits.
Organizations that build an operating model around enduring stability will have an edge. An organization’s strength is based on what its people have habitually learned to do together. If this is genuine strength, grounded in competent management of highly skilled people, then the institution becomes an attractor for people who are looking for havens for their money, their business, and their talent.
- Decentralized resilience.Resilience is the ability to absorb shock: to evade the worst effects, to reduce the overall impact, and to manage the negative consequences. For companies, this means not being too vulnerable to any one sector or any one relationship. Different parts of the organization also need to have different governance models. That frees people who are truly excellent in what they do to respond more rapidly and adroitly to threats when they surface, so they can reach a profitable, relatively secure outcome. Decentralized enterprises tend to be resilient, because if they get hurt in one place the business as a whole is still viable.
But decentralization does not mean lack of a central focus. A company composed of multiple business units that have little to do with one another is not truly resilient. It is merely a collection of vulnerabilities, each on a different time line. Coordinated decentralization—within a company, and among companies—is going to be very important in the future. The most successful leaders will clearly articulate what they stand for and make it easy for others to make the right decisions.
- Broad and deep relationships.The success of an enterprise doesn’t depend solely on how much value it provides for its clients annually. It can also be measured by the breadth and depth of its associations over time.
Breadth reflects the number of connections a company has. As a company leader, is your relationship with another company limited to connections with its leaders? Or are people throughout both enterprises working closely together? Networks are much more resilient than individual touch points. Particularly when a company is doing business internationally, it doesn’t want one person in the firm to have relationships with 10 clients. If that person walks out the door, he or she takes those 10 clients too. Companies need to strive for more networked relationships, so even if somebody leaves, its customers are still engaged with other people and multiple parts of the firm. Such networks also become crucial in times of crisis: If your business loses access to critical resources, you can tap this network to maintain the status quo until you are able to get operations back up and running.
Depth represents the way your company engages with others: the intensity, creativity, and outcome of your work together. The quality of relationships is increasingly crucial for staying in business.
Most companies can’t change easily. They’ve invested a great deal of time and money in their existing businesses—even in basic things like getting licenses to operate and vetting the right partners. And their patterns of behavior are much more deeply rooted than they think. Employees resist change, in part, because they see the value of what they already have, and don’t want to see it thrown away. In business, as in nature, you can’t grow too big and remain agile.
Because you can’t be fully agile in ambiguous times, be a steward of your organization. Be stable, resilient, and networked enough to succeed. And remember that if the environment is particularly dire, sometimes simply not ceding ground as you recalibrate for the future is a victory in and of itself.
An excerpt from an article by Ian Bremmer in S+B
Full article @ http://www.strategy-business.com/article/00306?pg=all