Davos 2024: Dealing with change everywhere all at once

To quote a popular saying often attributed to renowned physicist Niels Bohr and legendary baseball player Yogi Berra, “It is difficult to make predictions, especially about the future.”[i] While that may be true, each year, my conversations at the World Economic Forum’s (WEF) Annual Meeting in Davos prove to be a reliable barometer of what’s ahead for the global business community.

This year was no different. The CEO agenda came in to view over the week, with some issues demanding more attention than expected. Artificial intelligence (AI) was undoubtedly in the spotlight, but caution around economic growth, geopolitics, sustainability and talent were all making headlines.?

What continues to strike me about these issues – and the discussion in Davos was no exception – is the interrelated nature of all these developments and the overwhelming sense of “everything happening all at once.” We know change is constant. But the velocity has increased and the disruption – and transformation – we are experiencing is foundational.?

With that in mind, here are three overlapping areas that will demand renewed attention in the year ahead.

No, it’s not just hype: don’t underestimate the impact of AI

The feeling of change everywhere all at once is undoubtedly fueled by AI, and it was everywhere at Davos. During the week, the International Monetary Fund released figures that AI would impact 40% number of jobs globally, but EY CTO Nicola Bianzino’s reaction to that was: “That’s underestimated, it will be 100%.” Many are leaning into the yet undefined transformation we will experience, with Microsoft CEO Satya Nadella predicting that 2024 will be the year organizations scale AI, giving people intelligence at their fingertips [ii]. The EY view is that the pace of transformation in 2024 will make the last 12 months look like a warm-up. We know it will touch every role at EY – and that’s why we are focused on not only hiring people with these skills, but training all existing EY people to compete and apply these new skills to their current roles.?

That’s not to say there wasn’t considerable attention paid to the risks and the guardrails needed. For organizations, that means putting in place responsible AI principles that cover critical considerations such as accountability, security and transparency – and providing ample human oversight. In many countries, the AI regulatory race has begun. The recent EU AI regulatory act was in focus, but other regulatory efforts , policies and safety initiatives are also under development in various jurisdictions including China, Brazil and the UK.

Geopolitics is a Board and C suite issue, and will stay that way

This year’s annual meeting took place amid escalating geopolitical tensions and devastating global conflicts, and there was no ignoring that reality. With over 60 heads of state in attendance, and headline speeches by leaders from Ukraine, EU, France, the US, China, Iran, Qatar, Argentina, Vietnam, and many more, the world’s leaders came to Davos to emphasize the risk of further fragmentation and the need for cooperation.

While business has now a thicker skin when it comes to geopolitical uncertainty, it’s clear that more dynamic strategic risk assessment will be needed. Over the last year, 99% of CEOs EY surveyed said geopolitical risks are affecting their decision-making; 40% are delaying planned investments, and 37% have stopped planned investments altogether. With no resolution to the current conflicts in sight, this is sure to persist.?

The geopolitical issues that will challenge global business strategy are not just country-based issues, but larger macro strategic shifts such as the politics of oceans, the geopolitics of AI and the competition for commodities. Moreover, on a country basis, 50% of the global population and 60% of the world’s GDP will be voting in leadership elections in the next year. This phenomenon will inevitably lead to changes in the political, economic and regulatory environments around the world.

Sustainability reporting as strategy

Sustainability is a perennial topic on the agenda at WEF, but it’s becoming more difficult to navigate for companies preparing for a range of possible reporting mandates. The least favorable scenario is unfortunately the most likely: A fragmented regulatory environment, with separate rules for the EU, the US and countries that adopt ISSB (International Sustainability Standards Board) standards. This could put an enormous burden on global companies, especially as local jurisdictions add their own tweaks to these rules.

To meet increased reporting demands, companies are putting much of the responsibility on their compliance and finance departments. But to meet rigorous reporting standards and communicate performance to investors with confidence, companies must look at non-financial metrics and disclosures as a matter of strategy as well – keeping sustainability on the board agenda amidst competing priorities (like AI, a challenging economy, and geopolitical risks) where it belongs.

The imperative of strategic transformation

With all these interrelated issues front of business leaders’ minds, it would be a mistake to put transformation on the back burner or wait until disruption forces your hand. Businesses need to engage with constantly changing new technologies, plan ahead with more robust risk management strategies (inclusive of geopolitical risks) and build in resilience to prepare for all potential outcomes now. The companies that integrate the type of dynamism needed to succeed in this new, volatile reality, will lead the way.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

[i] https://pubmed.ncbi.nlm.nih.gov/33383160/#:~:text=A%20quote%20attributed%20to%20many,what%20parents%20want%20when%20they

[ii] https://www.youtube.com/watch?v=p9v-h_XYxMw