Navigating an uncertain, polycrisis-riven world
Seven dominant geopolitical and technological trends that shaped 2023, and are likely to be influential in 2024
One always tends to overstate the present in comparison to past periods, but I can’t find in living memory the combination of crises the world faces today. We have wars in Europe and West Asia, the threat of pandemics is a lived reality, global warming is no more in the future, the demographics of many countries have forever changed, and developments in technology are such that they may change humanity for better or worse.
Leaders, whether in politics or business, must navigate a polycrisis-riven and uncertain world. The uncertainty embedded in the environment is unlikely to go away and leaders must get comfortable navigating it. To help parametrise uncertainty, they must create a framework within which to interpret the seven dominant trends that affect their environment.
Geopolitics and dependence: It is clear, the old order has passed but a new order has not yet been established. The United States (US) appears unsure of the role it wants or can play in the world. Its influence is contested not just by China, the superpower contender, but by the five or six middle-power countries unhappy with the power structure created post World War II as it does not capture their current position. The US is primarily focused on containing the threat from China. The middle powers are trying to reshape their own environments with as much strategic autonomy as they can get. The Cold War parallels of yore are not useful, for as former US secretary of state Condoleezza Rice wisely remarks, “Globalisation is a fact, not a policy, but no country wants to risk core dependence on any other country”. So, while trade between the US and China has increased this year, despite the rhetoric, each country is taking vital steps to curb dependence on the other. All countries and companies, therefore, need to incorporate geopolitical opportunity and risk in their planning. The opportunity for many countries is to fill the space created by the US shift away from China. Apple revenues going up to $10 billion from India is one such illustration. Depending on their relative alignment with the US or China, countries and companies need to evaluate the extent of their dependence on say the Chinese market for their revenues, their production, their feedstock, the alternative availability of that feedstock, talent and the interlinkages in their supply chain.
Technology and concentration: The innovation and excitement around developments in technology around a wide swathe of areas is again without precedent. I take data as a separate trend and so will address Generative Artificial Intelligence (AI) under it. But if one reflects on the developments in multiple technologies — quantum computing, robotics, 6G, space and pharma with, say, the mRNA-type tech — the possibilities are enormous. The biggest threat countries face is to get shut out from the new technologies. India has a chance to avoid getting shut out if it acts decisively to partner with the US in this area and actively address its domestic research and development ecosystem to become deeper and better. In this, India’s digital public infrastructure is already challenging many mainstream business models (say UPI for payments, ONDC for commerce) and creating opportunities for others. Companies need to keep a keen watch on emerging patents in their area and recognise innovation as a key competitive lever for survival.
Data and privacy: The developments in Generative AI have taken the world by storm. It is one of the first innovations that has come with so much potential and yet has caused so much alarm about machines taking over the world. India starts with a profound potential advantage with its Aadhaar data set with over a billion people, its engineering and developer talent, and its deep connections with its diaspora on the West Coast. The potential for instantaneous language translation further overcomes the English entry barrier for the masses. The data philosophy of India to empower its citizens with their data is distinct from China where the State owns data, or the US where the companies own data, or even Europe where the bureaucrats manage data. Effective use of data will be core for companies to win in the future where Richard Baldwin notes that the new globalisation is going to be around services and a sharp rise in services trade.
Global warming: The climate crisis brings its own challenges on every dimension — be it the massive financing gap, controlling emissions by cutting fossil fuel, (the proposed discriminatory carbon tax that will tax the Global South for the environment crisis that the rich have created to help their own transition to green), the creation of new business models for recycling and circularity, managing water, regenerative agriculture, and nature-based solutions. Overcoming the costs of transitions and finding new opportunities must be the mantra for governments and companies alike.
Demography: How does demography reshape society and business? The world underappreciates ageing. Think Africa with an average age of 19, India at 29 and China at 39, developed Europe close to 44, and Japan at 49. What happens in the future to pension payments and the nature of migration? What business opportunities emerge due to ageing — for example, health care? What are the costs of poor education and skilling?
Capital costs: The interest rate environment post government Covid bailouts have shifted to high. Add to that environment transition costs, financing wars and elections in half the world and it looks like rates will stay higher for longer. Both governments and companies need to be alert.
Talent and upskilling: All companies need to evaluate whether their workforce is fit for purpose and how to train the pilot while they are flying what is “possibly” a new aircraft.
Leaders need to incorporate these trends in their strategic calculus. The winners and losers of tomorrow are being decided by actions today. There is no place for the unprepared or the timid. Winners can’t wait for the waves to settle before they enter the ocean!
Janmejaya Sinha is chairman, BCG India. The views expressed are personal
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