In these difficult times the only certainty about the future is that it is uncertain. Nevertheless, many CEOs remain optimistic about their three-year prospects, despite the reality that no one knows when the economic downturn will end or what its ultimate impact will be.
"When you have a structural event [like the financial crisis] something fundamentally changes....This is going to shake up fundamentals in a whole host of global economic areas."
Mukesh Ambani
Chairman and Managing Director
Reliance Industries Ltd., India
Proposals indicate that connectedness is both part of the problem and part of the solution. Globalisation has produced huge economic returns, but with an equally huge consequence: cross-border flows of information, people and capital are responsible for spreading this crisis and inflicting more damage than ever before.
As it was in good times, the world is now united in bad times. Many have concluded, perhaps hastily, that nations and industries need to focus on protecting themselves from others. The findings from this year's Global CEO Survey, however, suggest that the opposite is true. Markets around the world are now linked inextricably, and this global connectedness is impossible to stop. More crises are coming, the scope of which is too wide to be tackled by any single nation or business, and it is therefore important that nations and industries work together to create worldwide equilibrium.
How do we prepare? CEOs from across the globe have spoken, from which common themes have emerged.
Businesses have no choice but to increase the strength and variety of their connections. The extreme conditions in which they currently operate are beyond the control of any one organisation. CEOs believe that the only way to mitigate risk and realise opportunity is through collaboration with many different stakeholder groups to gather better information about the critical drivers of business.
To aid businesses, public policies need to be clearer, more stable and internationally coordinated. Businesses will be investing huge amounts of capital into solving global problems, and in return they need to be able to calculate risk and return. In the case of climate change, CEOs confirmed that the choice of policy is much less important than transparency, leadership and consistency across borders.
Andrew Cosslett, CEO of Intercontinental Hotels Group, speaks on an uncertain economic outlook and how businesses are responding to the deep and wide economic issues.
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Market participants need to shift their mindsets. CEOs are taking responsibility for issues that were once considered outside the scope of any single business. They believe the criteria for success needs to change accordingly. Part of the criteria must include an investment in large-scale opportunities that have less predictable returns and the mitigation of risks that have the potential to erase years of incremental gains. As long as predictable, quarterly earnings remain the ultimate measure of success, short-termism will continue, ultimately creating more crises in the future.
Despite a thin margin for error, business and governments have no choice but to keep testing new ideas. Research shows that this is where opportunity lies. Even in the hardest hit sectors, CEOs still spoke to us about gaining market share, planning for new markets and maintaining readiness for growth. Often, CEOs see the greatest business potential in products, services and operating models that also help solve large-scale, social and environmental problems. Furthermore, an increasing number of stakeholders, from customers to investors to employees, believe these issues are inseparable from success. In other words, the race to succeed in the post-crisis world has already started.
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