Leadership in an Era of Uncertainty and Change

Each morning, I take my two dogs (see dog tax photo at the bottom of this post) on a walk and fire up a podcast.?While I do love The Office Ladies, I also listen to a few pop economics podcasts.?A few months ago, I came across a podcast produced by 波士顿谘询公司 called The So What, where each week they look at the intersection of big business and social issues.?I generally look forward to these, however, I haven’t been able to shake last week’s episode from my mind, titled the same as today’s newsletter post.?

In this podcast episode, Georgie Frost interviews Rich Lesser, the global chair and former CEO of Boston Consulting Group (BCG), about the challenges facing businesses today, including geopolitical troubles, macroeconomic uncertainty, and labor market disruption. Despite these challenges, Lesser observes that many CEOs are feeling confident about their businesses, as they have had years to get their balance sheets in place and are not seeing preemptive layoffs, which would indicate an underlying lack of confidence.

However, the current situation is different and challenging, with high uncertainty and massive change happening simultaneously. Business leaders are challenged with navigating both uncertainty and change, which requires them to evolve rapidly to stay competitive. Lesser emphasizes the increasing importance of innovation and adaptation in the face of the rapidly changing world, with the weight shifting towards those who can innovate and adapt well.

While resilience is top of mind for CEOs, they are also looking at how to be resilient without compromising medium- and long-term requirements for thriving. Resilience is not just about layoffs and firing, but also about how they procure, price, build supply chains, sense what's going on, and create decision structures that are faster to respond. Lesser also highlights that dealing with technology, particularly the application of AI, is a significant concern for most companies, and responsible AI has become a more prominent concern for business leaders recently.

The deteriorating US-China relationship is a major concern for most companies due to the dependencies that have been built up over decades, which are enormous and not limited to direct supply purchases. Many businesses have built an enormous part of their overall value creation engine in China, and it's not clear how they will handle further deterioration. The AI of today is already having a significant impact, but the AI of 2026 or 2027, which is two or three generations from now, is a massive unknown that is concerning. The competitive pressures between nations and companies are so high that it's difficult to see how the improvement curve of AI will be paused.

Additionally, Lesser notes that physical technologies such as quantum, nano, synthetic biology, and climate tech are often overlooked due to the focus on digital and AI. He believes that we're in a decade of enormous potential in physical technologies and that companies should carve out a part of their creative mindset and lead innovators to focus on deep tech more broadly.

In terms of climate and sustainability, Lesser distinguishes between companies' climate goals and broader climate commitments, noting that most companies remain committed to their climate goals. He believes that increased transparency requirements from regulatory bodies and standard-setting bodies will help ensure that companies remain committed. While the energy transition is complex, and fossil fuels will still be needed for decades to come, he sees enormous potential in the development of sustainable energy sources.

Business leaders today face a unique set of challenges, characterized by high uncertainty and massive change happening simultaneously. Navigating both uncertainty and change requires rapid adaptation and innovation, and business leaders must balance resilience with the medium- and long-term requirements for thriving. While technology, particularly AI, is a significant concern for most companies, physical technologies such as quantum, nano, synthetic biology, and climate tech are often overlooked but have enormous potential. Business leaders must remain committed to their climate goals and embrace sustainable energy sources as the energy transition continues to unfold. Despite the challenges, business leaders should also recognize the opportunities that can be found amidst the difficult times and work to adapt their businesses for the longer term by addressing issues such as technology, geopolitics, and sustainability.

One of the key takeaways from this podcast episode is that business leaders are facing a dual challenge of uncertainty and change in the current economic climate. While some companies are going through weaker periods, they are not in distress, and most business leaders feel like they can navigate their way through this well. However, as pressures mount, the emphasis on resilience has continued to grow, and business leaders are challenged with navigating this. The weight is shifting in value creation towards those who can innovate and adapt well, and this is both exciting and challenging for business leaders who may have grown up with a different expectation of what it means to be a strong leader.

Another important insight from the podcast is that technology, particularly the application of AI, is a significant concern for most companies. As AI continues to evolve and disrupt many jobs that were previously thought to be secure, business leaders must focus on understanding and using technology responsibly in their businesses. Furthermore, physical technologies such as quantum, nano, synthetic biology, and climate tech should not be overlooked as they have enormous potential for the future.

Finally, the deteriorating US-China relationship, increased societal and sustainability pressures, and the need for reasonably priced, accessible, and secure energy supplies of fossil fuels for decades to come are all challenges that must be navigated in the next five to ten years.

In conclusion, business leaders are facing a complex and challenging environment and must navigate both uncertainty and change. However, there are also many opportunities for innovation and growth, particularly in the areas of technology and physical technologies. The challenges ahead are not insurmountable, but will require strong leadership, adaptability, and a focus on resilience.

Today's dog tax, four of the office puppies [Jordan, Kobe, Cheddar, and Lizzy] at Suna Solutions . Photo courtesy of Kristen Bissell .