Adapting to Mounting Disruption
The rate of change in the global operating environment—whether political, economic, or technological, or all of the above—seems to be accelerating with each passing day. Not exactly a novel conclusion. What makes successful business leadership so very daunting, however, is the challenge of getting both the priorities (both exploiting opportunities and mitigating threats) and the timing right. Many business leaders can and do acknowledge the complexities, but too few succeed in formulating and then executing timely strategies based on strategic agility and foresight. Far fewer are positioned to adapt to longer-term disruption.
According to global business executives surveyed as part of our A.T. Kearney Global Business Policy Council 2017 "Views from the C-Suite" (here), the coming year is likely to be all the more complex. Eight-five percent of respondents tell us that they expect cyberattacks to become more frequent and costly. They also believe rising populism and protectionism are putting globalization at risk. Slightly more than three-quarters predict that economic and financial volatility will heighten and that populism will continue to gain ground in democracies around the world. As a result, they are concerned about the impact of protectionism on key cross-border flows such as trade in goods and services, workers, and direct and portfolio investment.
On the flip side, despite these worries, almost two-thirds of executives tell us that they still believe globalized business strategies are viable in the current environment. That reflects a strong focus not only on improving the execution of existing strategy, but also on re-designing and calibrating the strategy itself to reflect changing conditions. To that effect, almost all of the 400 global executives surveyed say they are shifting their supply chains and international footprints to respond to the current shifting global political and economic environment. They are pursuing some combination of changing their supplier mix, moving production locations, and targeting different sales markets, among other modifications.
How is the global C-suite developing these strategies? One especially important element strategic foresight—the systematic assessment of future uncertainty to inform the development of strategy and strategic planning. Over 90% of global executives tell us that they are using foresight methodologies today. The most popular tool is scenario planning. About one-third of executives are also using horizon-scanning and crowdsourcing in order to anticipate and plan for future contingencies.
These tools are increasingly vital to understanding current dynamics in the external environment and to narrowing the range of strategic uncertainties. Despite the new arsenal of analytical weapons available to leaders, including big data and advanced analytics, recent major surprises (think Brexit and Donald Trump) underline how important it is to plan for multiple--and all-too-often unpredicted--futures.