Seven Geopolitical Trends Shaping Corporate Strategy in 2023
Keeping on top of the most pressing global trends is critical to the corporate chief strategy officer’s role. But even forming a strategy around doing this can prove challenging. It seems that every week a new “once-in-a-lifetime” event or emerging technology threatens to disrupt business as we know it. A term widely gaining momentum to describe this present state is VUCA—volatile, uncertain, complex, and ambiguous, and learning to navigate this environment is critical to guiding decision making for strategy leaders in the near- and longer-term future.
In a recent Outthinker Network Roundtable, a group of chief strategy officers (CSOs) convened with Tom Crawford, Senior Managing Director and Chief Development Officer at Ankura, an independent global expert services and advisory firm—to discuss the top trends today affecting business decisions in today’s VUCA landscape.
Below, find a summary of the critical trends every strategy leader should be tracking:
“The more we can understand that intersection of government, business, politics, society, the better we're going to be able to operate our businesses, do our planning...and I think that's a really interesting framework to think about how this discussion fits into...the commercial and business world and realities you have to live with.” –Tom Crawford
Geopolitics Regarding China
While the dynamic between Taiwan and China has the capacity to become precarious should China invade Taiwan, it would ultimately not be the cataclysmic event that many believe it to be. For the U.S. specifically, much focus has been put into building semiconductor chip building capacity within the U.S., de-emphasizing the importance of Taiwan as a strategic partner. While unfortunate, Taiwan’s potential future could be similar to Hong Kong becoming part of China, with an initial international reaction, but eventual assimilation.
The impact of China’s economics and politics on the world is tenuous, but not as negative as often portrayed. While the Inflation Reduction Act revealed a heavy dependence on China for technology and resources, the extent to which China has undermined key sectors like steel, solar, and electric vehicles is becoming clear. Access to resources from China is crucial for achieving climate goals and transformations, and it’s imperative for business leaders to take this into account.
Geopolitics Regarding the Middle East and Emerging Markets
Investments in emerging countries, particularly in Africa and India, are significant. While Africa is exploring opportunities for investments from both China and India, India is attracting manufacturing and other investments away from China. However, the recent inflationary trends have a much more detrimental impact on these markets, leaving them vulnerable to economic forces beyond their control. This vulnerability opens doors for external actors, such as Iran, Russia, and China, offering aid, but potentially exploiting resources and leaving countries indebted.
The Middle East is emerging as a “free agent” in the global business landscape, with its own independent wealth and a willingness to engage with various countries. With its abundant resources and funding, the Middle East has the potential to become a hub for research and development initiatives. Sovereigns in the Middle East are becoming more independent in their decision-making and partner selection, resisting external pressure for reform.
Shifts in Global Trends
There are new subregions of power emerging. In terms of alliances and partnerships on a global scale, while multi-polarity—with the US and China as the two poles—becomes a stronger possibility, there are emerging sub-regions of new power that will force even China and the U.S. to become more reactionary and reduce some of their influence.
Consumers will steadily gain larger influence and power. Businesses will be forced to answer to activists, and stakeholders will be increasingly pressured to answer to consumers and take part in these discussions, diverging from this role being traditionally held by governments. In the same vein, the rise of a ‘technocracy’ means global technology companies are establishing their own ecosystems and influencing standards. Their decisions and implementations will shape industry practices, especially in areas like data privacy and control, which will also be heavily shaped by consumers.
The concept of globalization is evolving to mean sovereign nations assert their autonomy and form alliances to protect their interests, and countries become more localized. To succeed in such markets, businesses need to align with local partners and understand their expected contributions. Each market should be treated as a hub, requiring operational focus and alignment with local regulations and interests. Companies that can understand and respect national sovereignty are more likely to succeed.
*Note* This article is a small preview of the full discussion between our Outthinker Strategy Network members. The full discussion with video clips, transcript and detailed notes can be found in the member portal.