The line between business and politics has blurred. Business leaders can no longer see geopolitics as beyond their remit: COVID, war and erratic government decision making have created a new reality. The perception that geopolitics doesn’t impact on business has gone.
Furthermore, the assumption that geopolitical events will affect an industry uniformly is no longer a viable basis for strategy: companies can shape their exposures and dependencies ahead of time. The success or failure of businesses and their leaders now hinges on their ability to take sharp decisions in a complex landscape. The most proactive will lead conversations that will ultimately define their competitiveness.
COVID and war have altered the operating fundamentals for the industrial sector. Commercial decision making now requires greater awareness of the sensitivity of that decision to tectonic shifts in geopolitics. Leadership teams today are being forced to make decisions that feel innately political. Larger organisations in particular face growing scrutiny from the public and government over their management of these threats. Decisions are being made that will define organisations’ capacity to remain commercially competitive in the long term.
Leadership teams must not only react to such situations but anticipate and prepare for them. Companies that do so – and position themselves early enough – will gain significant competitive advantage. Firms that win are those at the “front of the queue”, engaging in conversations that allow them to move quicker than anyone else. Knowledge and understanding of the operation and mandate of governments and regulators are now critical components of leadership and, by extension, talent acquisition too.
Talent acquisition has also been forced to adapt. During the 2010’s there was a flow of CFOs moving to CEO roles in the industrial sector because cost savings, balance sheet management and organisational efficiencies were front and centre within business strategy. Now, successful CEOs and other C-Suite positions need to understand the impact of geopolitics on business and how to navigate strategically. Poorly informed candidates will struggle to make an impact in C-suite discussions.
Understanding both a business’ sensitivities to key geostrategic questions, and its appropriate response, will be vital to successful leadership. Effective leaders will combine internal expertise and external advice to challenge their assumptions and develop appropriate mitigation measures.
Miramar has been pleased to partner with Gatehouse Advisory Partners, a boutique geostrategic advisory firm in London, to enhance its clients’ awareness and understanding of the most business-critical geopolitical trends.