With the world in constant flux, how do company board members from different countries and different industries view the current business climate?
Diligent recently invited two dozen board members to an exclusive series of panel discussions. Topics included insights on political, economic and cultural themes. While many panelists expressed concerns specific to their regions, many board members shared their mutual concerns over the vulnerability, uncertainty and complexity of the world today.
What is universally regarded as critical: how open organisations are to hearing different points of view and how they might strategically employ that knowledge.
Here are some highlights:
The Changing Global Economy
China is experiencing an investment transformation. According to McKinsey & Company, by 2022, more than 75 percent of China’s urban consumers will earn about $9,000–$34,000 a year, in a nation where the average annual salary currently hits around $4,000. The panelists stressed that China needs to continue to reform its economy in order to keep delivering prosperity.
Iran, meanwhile, is seen as an untapped emerging market. With the signing of the relaxed U.S. trade sanctions, Iran is poised for economic growth. However, foreign companies, particularly banks, still face challenges when it comes to entering that market. The U.S. Treasury Department’s Office of Foreign Assets Control recently issued guidelines to clarify that non-U.S. banks could do dollar trades with Iran if those transactions don’t pass through financial institutions in the United States, reported Reuters. Overall, panelists shared a positive outlook for future growth in this region, but also expressed some uncertainty.
In Russia, President Vladimir Putin taps into his nation’s sense of lost prestige on the world stage in order to hold onto power. However, when it comes to global relations with the West, there’s concern that Putin’s strength may precipitate a slide toward a return to the Cold War.
Panelists expressed interest in seeing how, and if, China will continue to play its “Nationalist Card” to assert more regional supremacy.
As for security concerns, namely terrorism, some argued that ISIS cannot be halted, because terrorism will just reappear elsewhere with a different name. Others argued for a massive injection of funds to curtail the spread of terrorism in vulnerable countries. Stable economies might help curtail the economic and cultural fear that terrorism creates.
Among the risks company boards may face, according to our panelists, are the following:
- Black swan risks: The unimaginable takes an organisation by surprise. This could be a terror attack in the physical world or a cyberattack.
- Black elephant risks: A current problem that some may know about, but that nobody says anything about until it’s too late.
How do company boards prepare for all of these future risks and uncertainties? Here are several strategic tactics:
- Become an ark: Battening down the hatches and riding out all of the future economic and political storms. Weathering changes until normalcy returns.
- Become a shark: Perpetual movement in the form of change and searching for opportunities. This isn’t about swallowing up another company, but rather an attitude of self-preservation through aggressive tactics.
- Become a whale: Survival through acquisition or merger. Aim for combining with a larger organisation that could be potentially less vulnerable to risk.