Leading in a polycrisis demands strategies fit for an increasingly divided world.
A global pathogen. Economic collapse. Geopolitical aggression. Climatic breakdown. The combination of adverse factors threatening the welfare of society and the viability of commerce is bleakly familiar.
Yet this was not 2023, but 2008 – the year that the concept of ‘polycrisis’ first became real. In the late 2000s, swine flu, the global financial crisis, and Putin’s attacks on Georgia combined with the breakdown of climate talks in Copenhagen to create a sense of burgeoning calamity.
The world’s challenges were no longer linear and clearly defined. Instead, multiple fronts of increasing complexity and uncertainty emerged, each layering on the others. The polycrisis of 2023 had its genesis 15 years ago. “The unfolding of this current moment starts in 2008,” historian and professor at Colombia University Adam Tooze told the World Economic Forum (WEF). “The key things for me are economics, politics, geopolitics and the natural environment blowing back at us. Those four things don’t reduce to a single factor. The polycrisis term has a real use descriptively: ‘Look, there’s a lot of stuff happening here all at once.’ And that precisely is what we’re trying to wrap our minds around.”
Today’s polycrisis – the fallout from Covid-19; the deglobalization triggered by Brexit and the worsening relations between the US and China; and the escalation of Russia’s aggression in the shape of the Ukraine War – is framed against a global climate crisis. “If you’ve been feeling confused and as though everything is impacting on you all at the same time, this is not a personal, private experience,” says Tooze. “This is a collective experience.”
Leaders face a challenge unprecedented in modern times. We are faced with steering organizations through social, environmental and economic turbulence that is no longer just volatile, uncertain, complex and ambiguous, but also convergent, interactive and proliferative. “Disparate crises interact such that the overall impact far exceeds the sum of each part,” the WEF Global Risks Report 2023 says.
Disruption, displacement and destabilization
The challenge for future leaders is encapsulated by Duke Corporate Education’s Challenges of Change paradigm (see graphic, p27). The model shows leaders amid the Crucible of Change: the confluence of Three Ds: the interrelated challenges of disruption, displacement and destabilization.
Leaders are all too familiar with disruption, which takes many forms: The ability of startups to quickly enter a market, such as banking, via digital technology, free from the responsibilities and structural burdens of legacy firms. The dismantling of conventional business practice, triggered by Covid-19, that has freed people to work from anywhere but has also made building company cultures more complex. Social tensions caused by persistent racial and gender inequalities have become commonplace, and frequently transfer from wider society to inside organizations.
Leaders are less conversant with displacement: the geoeconomic shifts that are already visible and will expand and multiply in coming years, as the world becomes increasingly divided. China was until recently the workshop of the world, the global destination for outsourced manufacturing. Yet western businesses are now hedging their bets. Relying on China for production has morphed from a routine choice to a risky one. Thus, demand and production in its billion-population rival, India, has gone up. Revenue streams and partners once favored by the West are moving elsewhere. That requires a profound cultural shift by leaders who have been used to dealing with one rising power but now need to trade with another.
Yet displacement is more than a geopolitical effect. The rapid advance of AI is displacing jobs, rapidly removing the need for routine work, and placing a premium on highly creative roles that can direct algorithms to deliver products that humans once made.
The ‘steady job’ seems increasingly like yesterday’s concept. Tomorrow’s leaders face a workforce divided between the haves and have-nots; the creative class, who direct and innovate, and regular workers, who have more routine roles and face replacement. AI will foster much greater profit margins in companies – it will send labor productivity through the roof as more gets done, faster. Moreover, for routine work, robots are cheaper than people.
People at the top will reap the rewards, while those at the bottom face underemployment, or unemployment. The destabilization of companies – and societies – is a likely consequence.
Symptom and cause
As the model illustrates, disruption, displacement and destabilization generate a negative ecosystem in which they feed and fuel one another. As digital and social disruption increases, legacy structures and business relationships weaken, and displacement ensues. The destabilization that occurs triggers further disruption as organizations strive to radically alter their business models amid epochal change. Each of the Three Ds is both symptom and cause of the others.
Strategies for success
At Duke CE, we envisage three core leadership strategies for leading in this new paradigm. Core to leading successful people and organizations are:
- Instilling a change mindset
- Fostering collective purpose
- Mastering generative leadership
Instilling a change mindset
A change mindset is often advocated. It is less often demonstrated. This is partly because embracing constant change, uncertainty and ambiguity is counter to established business practice – which seeks instead to foster a sense of control. Yet a change mindset is critical for succeeding as a leader in the new paradigm. It requires leaders to:
Envisage multiple futures. Rather than perceiving decisions as single inflection points which lead to a binary outcome of success or failure, leaders must learn to envisage and perceive many viable futures perpetually. Confronted with stacks of data and time pressures, leaders cannot afford to solely look at the immediate consequences of their actions. They must refocus on the unintended consequences to their decisions. This requires leaders to open up their leadership aperture to ask themselves not “what is possible?” but “what could be possible?”
Embrace continuous change. Change is not an identifiable ‘fork in the road’ but a constant state. The only constant is today – the most stable day for the rest of your life. Change is the new normal. A change mindset requires leaders to harness the opportunities presented by a state of chronic flux, rather than perceiving change as an acute threat to be mitigated or managed. When making a choice, ask: “What would I do now if I wasn’t afraid?”
Consult the past. History can be a useful tutor. Interrogate your past decision-making based on knowing then what you know now. What changed? Would you have approved major investments in 2007 if you knew the global financial crisis was around the corner? Would you have signed off on a new office lease in 2019 had you known Covid-19 would force homeworking for the following two years? It is easier to embrace uncertainty and rapid change when you prove to yourself that they are both inevitable and unpredictable.
Fostering collective purpose
The evidence is strong. Companies where purpose drives strategy and decision-making innovate better and are more effective at transformation, according to the EY Beacon Institute. Through fostering a sense of purpose, leaders can:
Boost employee engagement. Better engaged employees are more likely to respond well to change. “Most change projects use financial goals, such as a 10% return on investment,” leadership thinker Antonio Nieto-Rodriguez writes. “Yet these goals don’t inspire people to commit passionately to the change initiative.” Tomorrow’s leaders appeal to higher goals. Think about how your projects can boost the environment, society or customer wellbeing. Then communicate those benefits to your teams. Nieto-Rodriguez cites the example of Sony co-founder Akio Morita. Back when Japan was perceived as emulator, not innovator, Morita said Sony’s purpose was to make the country renowned for the high quality of its products. It was a patriotic aim its employees could get behind.
Find the ‘why’. Effective leaders ask: “Why are we doing this?” When potential change projects are tendered, interrogate the value of them to the company and customer. Imagine a retailer wanting to radically upgrade its website, a long and labor-intensive operation. By asking “why?”, the reason morphs from “to add augmented reality to our website”, to “creating an enriched service for our customers that will deliver greater sales to the company, and more bonuses to our employees”.
Detail the benefits. If your change project has benefits above and beyond an incremental increase in your bottom line, communicate them. This sounds obvious – yet it is all too common for those leading important projects to be modest and/or unclear about the advantages their projects will deliver. Publish a clear roster of benefits that all stakeholders can digest easily.
Mastering generative leadership
Generative leaders lead around their organizations, not just within them. Their goals are commercial and humanitarian, environmental and social. They are centered on human relationships. Generative AI dominates boardroom conversations, yet the technology’s limits are becoming clear. It generates solutions based on the data and decisions of the past, optimizing for the world ‘as is.’ Generative leaders however focus on the world to be built – what is novel can be generated only through creativity and curiosity. To that end, generative leaders:
Align commercial and ESG benefits. Tomorrow’s leaders understand the positive correlation between ESG advantage and commercial advantage, and can communicate that to their teams, customers and other stakeholders. “Many leaders labor under the false impression that there must be a trade-off between doing good for society and the planet, and delivering returns to shareholders,” finds the Boston Consulting Group. “But studies consistently show a strong positive correlation between companies’ commitment to environmental, societal and governance concerns.”
Attract the best talent. To develop a change-ready organization, you need change-ready people. Generative leaders – who lead with a pro-ESG mindset – are more likely to attract and retain talent. For example, an IBM survey found that 71% of actual and potential employees considered companies with a strong environmental record more attractive employers.
Create powerful unbounded teams. Siloed working and ‘business as usual’ will be ineffective in tomorrow’s rapidly shifting world. Generative leaders develop powerful, talented ‘flying squads’ that can innovate at speed across departmental boundaries. By embedding rapid decision-making and accelerated innovation through breaking conventional corporate divisions, generative leaders prepare their organizations for ‘business as unusual’.
Leaders who can master all three strategies will be equipped, not simply to survive disruption, displacement and destabilization, but to thrive despite them. They can forge a path for themselves, their people – and other organizations and governments – to follow. The future is unknown. It need not be unsuccessful.
Sharmla Chetty is chief executive of Duke Corporate Education Vishal Patel is president of global markets at Duke Corporate Education.