Polycrisis: Understanding the Impact of Leadership

In a highly interconnected world, crises are no longer limited to a specific region, but quickly spread to other regions as well, magnifying the impact of the initial events. In his 1999 book titled Homeland Earth: A Manifesto for the New Millennium, French complexity theorist Edgar Morin and his co-author Anne Brigitte Kern warned of the “complex inter solidarity of problems, antagonisms, crises, uncontrollable processes, and the general crisis of the planet.”?

European Commission President Jean-Claude Juncker used the Greek term “polycrisis” to describe the situation triggered by the 2008 financial crisis. Polycrisis refers to a situation where multiple crises occur simultaneously, creating a complex and interrelated set of problems. This can involve natural disasters, economic events, health pandemics, and political turmoil.?

Polycrisis can cause a concatenation of shocks, with the potential to trigger other crises having far worse effects than the sum of its parts.

Putting Crisis Into Perspective

Polycrisis is not only associated with the components within a single system that are highly interconnected, for instance the healthcare system or the political system. There is also a deep connect among systems such as health, environment, geopolitics, the economy, and so on. Clearly, if one system malfunctions, the crisis might cause other systems to fail, leading to catastrophic negative feedback loops across multiple systems and affecting the

entire world.

The World Economic Forum defines polycrisis as “a cluster of related global risks with compounding effects, where the overall impact exceeds the sum of each part." The most recent example of this is the war between Ukraine and Russia which has sent shockwaves across the global economy. Energy and food prices have skyrocketed, elevating the cost of living and in turn triggering political and social unrest.

Crisis In Action?

The recent WEF meeting at Davos discussed “polycrisis” extensively. The heightened connectedness of systemic risks elevates the chances of a polycrisis in today’s world.

While polycrises have taken place more than a few times in history, the COVID-19 pandemic was perhaps a recent polycrisis that affected almost every system and region of the world. While leading to large-scale disruption in global supply chains owing to strict nationwide lockdowns, the pandemic also worsened social dysfunction. The already fragile healthcare systems collapsed leading to heavy loss of life. Restrictions led to a halt in economic activity causing massive job loss, and subsequently, social unrest and worsening the income gap.

The image below shows how global risks pan out in an increasingly interconnected world.

Source: WEF

Leading in Crisis

Looking back to when I was leading China for Nielsen, I was one of the first to experience the COVID-19 lockdowns and the ensuing uncertainty. The rapidly changing situation was new for each one of us, but as a leader in this highly interconnected world, it becomes critical to quickly devise an approach to tide over such a polycrisis.?

Preparation is crucial when it comes to leading in times of such events. Leaders can consider the three steps framework laid out by PWC to help prepare and mitigate the effects of a polycrisis:?

Repair: Leaders must act fast in response to a crisis. While making bold decisions, leaders need to be humble enough to ask the right people and course correct when necessary. When COVID-19 first hit China, we held daily crisis?meetings?. We focused on ensuring that those people who would take on tasks head on were part of the meetings rather than simply having senior leaders join in. Whilst it is difficult to fully anticipate such scenarios, ensuring your leaders are agile and are taking risk assessments seriously is an important first step.

Rethink: Leaders should work in the present while provisioning for the future. Leaders across the world expect many such polycrises to happen. Does your current strategy integrate these possibilities? Is your organization leveraging the latest tech to counter these crises? Leaders must ask themselves the hard questions, especially given the frequency of polycrises in a more connected world is likely to increase.

Reconfigure: We as leaders must develop a vision that incorporates all global, market and societal forces at play.? A strong and able leader can take lessons from one of the biggest crises the world has seen in nearly a century and set the stage to manage future crises proactively. COVID-19 and its after-effects have been a training ground for leaders and evidence shows that the most resilient leaders and companies will outperform others.

Source: McKinsey & Co.

Conclusion

Leaders of the world are recognizing the rising possibility of consistent ongoing crises compounding each other to continue. Polycrisis has the potential to cause large-scale negative effects through the causal interaction of global systems. However, the proponents of this concept also underestimate how capable the global economy and political systems are to mitigate these shocks. A continued focus on building resilient personal, relational, and cultural foundations can make us prepared for future crises. In this context resilient leaders and leadership is absolutely critical.