The current macro-economic backdrop, the ways of adapting to challenges and rapid pace of change and leveraging global networks is impacting us all, and for leaders across industries it is vital to understand.
Standard Chartered was founded in 18621, when a new trading age was emerging. It was a time of huge upheaval; the Suez Canal was opening, the first transatlantic cables were being laid and networks were growing and changing.
In early October 2019, leaders of global corporates and financial institutions gathered in Standard Chartered’s UK headquarters for the Business Leaders Forum. At the closed-door forum, they were reminded of this past, and of the ability of business to withstand disruption, harness change and adapt.
Clare Francis, CEO, UK and Regional Head of Global Banking Europe, encouraged delegates to face today’s headwinds with an eye for opportunity.
“We need to understand the backdrop we are operating against, adapt, and build new networks for growth,” she explained, before articulating the many ways in which trade today is characterised by continuous and extreme upheavals.
“The ‘Emerging 7’2 are catching the G7 and the decisions shaping this century will be made not in London, Paris or Berlin but in Beijing and Mumbai, as they were 100 years ago,” she said.
The economic facts certainly support this assertion about a shift in power:
- The Intra-Asia corridor is already the biggest containerised trade lane in the world, growing at more than 5% annually
- Africa’s combined GDP is predicted to double by 2030 and
- India will become the world’s third largest economy by the end of the next decade. (Bilateral UK-India trade grew 14% last year.)
Optimising these new world opportunities will, of course, require staying resilient to challenges elsewhere. Global growth is slowing – worsened by the US-China trade war, which looks increasingly like a de facto technology arms race.
Bond yields are negative, equity markets are resilient, which is confounding, and liquidity, while abundant, is in search of sustainable growth. Climate action is critical; there is now indisputable evidence that companies adhering to ESG3 criteria outperform companies that don’t.
The UK’s future relationship with the European Union is still uncertain but regardless, business leaders must now plan for 2020 and beyond. The UK is facing a protracted political crisis, “although not yet an economic crisis,” said leading economist and author, Dr Gerard Lyons, who was among the guest speakers.
“Ahead of the 2016 referendum, every economist agreed the UK was open and dynamic,” Dr Lyons recalled. “Since the referendum, we have proven this to be the case. International investors are still making positive moves towards the UK.”
While politics divides opinion about the impact of Brexit in the short term, business leaders are expressing greater optimism around the long term – and indeed robust opinion about the importance of optimism, per se.
The digital transformation
Speaking at the Business Leaders Forum, London Business School Professor of Strategy and Entrepreneurship, Costas Markides, blamed negative attitudes for the fact that 78% of the business leaders he surveyed recently were dissatisfied with their digital transformation programmes.
“Scare tactics – adapting your business out of a fear of failure – won’t achieve lasting change,” he asserted, advising companies instead to galvanise teams around a positive vision of the outcomes that transformation will deliver. Companies need to institutionalise adaptation in their day-to-day behaviours.
Navigating ever greater transformational forces is challenging leaders across the UK and beyond. Building new networks is the way to confront this complexity – digital networks, new geographical networks and new partnership ecosystems.
The same could have been said in 1862: the world we know today isn’t the one we’ll know tomorrow and what got us here won’t get us to where we want to go next.
1 Standard Bank was founded at this time and later merged with Chartered Bank
2 China, India, Brazil, Mexico, Russia, Indonesia and Turkey
3 Environmental, Social and Governance