It’s been an interesting exercise to conduct research with clients and business leaders across the globe these past few months. We have just launched our annual global survey of business leaders last week, exploring how executives intend to Achieve their post-pandemic vision to be leaner, greener and keener.
What our research has revealed is the extent to which the lack of global and national coordination around the pandemic has exposed the vulnerabilities in our systems for living, working, trading, plus amplified many familiar challenges for governments across the globe.
Decisions, by governments and businesses, on whether to open or close borders, whether to open or close shops, what vaccine to develop and how to manage their roll-out, all have significant knock-on effects for business and society. Each decision also reveals the trade-offs involved and their impacts on equality, fairness, access to good healthcare, all critical questions governments face to keep people safe from harm, and, at the same time, active in a healthy economy and labour market.
The importance of good government
Despite the disruption and the uncertainty, an impressive 75% of business leaders we’ve surveyed around the globe are confident of growth in 2021. Of course, this ‘stat’ (an average across 55 countries and nearly 600 business leaders) includes some relatively positive sentiment from executives based in countries managing the pandemic well.
In China, for example, 87% of business leaders are confident in their own growth prospects for growth in 2021. It’s not just a case of ‘first in and first out’ of the pandemic, there’s more to it. Experience in managing flu outbreaks, such as SARS, has better-prepared economies in the Asia Pacific (such as China, Korea, Vietnam, and Japan) to effectively contain the pandemic and its economic impacts. More critically, these countries benefit from significant government investment in physical and technological infrastructure as well as well-funded healthcare systems to support physical and economic wellbeing. An adept approach to the crisis, in turn, fosters more trust in governments to manage the pandemic and more support for policies designed to contain further outbreaks (including adherence to restrictions).
Business response to considerable challenges
Given the lack of a coordinated global response, business leaders in many developed economies, by contrast, have been left to their own devices to navigate the pandemic. Leaders have had to adapt their operations, starting first with ‘battening down the hatches’, reducing headcount and focusing on cash flow. Improving operational effectiveness and reducing costs are the top two areas of focus for our respondents in 2021.
Over a third are concerned about increased protectionism and nearly half are worried about the impact of international trade flow disruptions on their operations. Relatively few are outsourcing, in fact some will be onshoring activities and many more working to automate functions. 88% of leaders we surveyed are turning to technological advancements to help overcome cross-border business challenges. The pandemic has accelerated digital transformation as technology has become critical in sustaining business activities.
It’s clear to me that global trade maps, designed around 20th-century ideologies of the free-trade and commercial movement of goods, capital, services and people, are experiencing a shakedown.
At the same time as trade is turning inward, the public are observing governments across the world delivering varying degrees of success in managing the global pandemic. Citizens and businesses expected effective, fair and timely government interventions but their governments have been found wanting. Failings have fuelled further mistrust and misinformation, even prompting social unrest. Indeed, more than half of our respondents are concerned or very concerned about social instability, as public mistrust extends beyond the confines of the pandemic to other causes (from equal rights to climate change). Together, these two factors are prompting a re-assessment of the effectiveness of free-market forces to deliver a stable future foundation for the wellbeing of citizens and the economy.
A new spirit of multilateral cooperation
The free-market mantra around less-government intervention, less-regulation, and the idea that the market will solve for everything, is being replaced by a call for active government investment to support business and save lives. The first step by many governments has been the rollout of significant and coordinated economic stimulus packages — a good start.
Coincidently, or perhaps consequently, a change of leadership in the US is likely to usher in a period of confidence in a more active and effective government. My hope is that globalisation, as we knew it, is likely to be replaced by a new spirit of multilateral cooperation between nations, with relationships based more on trust and values than on trade and capital alone. This change could prove instrumental in solving some of the world’s biggest problems – from COVID19 to Climate Change.