Last weekend, I read a newspaper article about how students in England who are about to enter university are ditching the humanities for subjects such as medicine, law, and engineering, which are perceived as offering greater job security after graduation. It is a trend that has been growing for several years, often driven by the need to earn money quickly in an education system where most students take on considerable debt compared with students in other European countries. England has produced some of the world’s most successful humanities graduates, including J. R. R. Tolkien and J. K. Rowling. Some students would no doubt prefer the freedom to pursue what they are most passionate about and succeed on their own terms, but instead feel compelled to make a calculated career decision before their adult lives have really begun. For many, choosing a university course will be the first time they have had to make a decisive choice between financial security and the freedom to become the person they truly want to be.

Long before modern society, human beings have often pondered how much protection they needed to feel secure and how much freedom they needed to adapt and create meaning in their life. There always seems to have been a historical tension between one and the other, but it is more difficult to have sufficient amounts of both at the same time.

Ancient philosophers such as Plato and Aristotle thought about these sorts of issues nearly 2500 years ago. Later, political philosophers such as Hobbes and Locke provided the initial frameworks for this dilemma. The pessimistic Hobbes, leaning towards security, had imagined life without an overarching authority as chaos, while the more optimistic Locke insisted that liberty was essential for trust and progress. But centuries later, their philosophical debate still lives on, even beyond the philosophy departments of universities. This perennial debate is at the core of how societies work. It also matters when we make decisions about our career or invest for our future.

Subscribe now

But this tension is also a systems problem. It would not be complete to say that security and freedom are just philosophical opposites. Rather, they are more like twin forces that oscillate within every system, pulling and pushing, shaped by feedback loops, incentives, constraints, and the way risks propagate through complex environments such as the international political system.

When political leaders over‑optimise for security, they often trigger second‑order effects that reduce their ability to adapt or survive later. Take the example of the Cold War, which divided a large part of the world during the second half of the last century. Many of the leaders of the nations engaged in this conflict had come to realise that while security can make you feel relatively safe, too much of it could also become a trap. A security dilemma arose where one side’s defence became the other’s threat. The quest for more security just made the system feel more insecure. For citizens, it meant there were things you couldn’t do, places you could not visit. Freedom became a casualty of security. The eventual collapse of the Soviet system showed clearly how too much security without enough freedom left it unable to adapt. In the aftermath of 9/11, Western societies also experienced the phenomenon of too much security and not enough freedom as travelling by air became more cumbersome. More recently, the quest for health security during the COVID pandemic led to national lockdowns in many countries throughout the world but also produced economic and social consequences, with increased unemployment and isolation a factor for many.

In the workplace, a similar story has also unfolded over time. Take the example of the loyal Japanese salaryman (サラリーマン) who found stability in his work life, but at the cost of creativity, or the restless Silicon Valley workers who have pursued freedom over job security but also discovered job volatility and burnout. Investors also face this same sort of dilemma when they trade in the financial markets. Their priorities reflect how they trade. For example, bonds offer relatively good financial safety; some sometimes claim to be as good as gold, but they offer little growth. Equities promise greater freedom through higher returns, but they are also exposed to wild swings in the market, so they offer less security. Everywhere we find human decision, it seems we run into this dilemma.

Read more

The fundamental purpose of most businesses has long been to generate profit and create wealth for their stakeholders. From the mass production and vertical integration of the Ford Motor Company in the early 20th century to the focus on intellectual property, software and ecosystems by big tech firms such as Apple today, the methods used to achieve that purpose have evolved, particularly as technological innovation has progressed, financial engineering has become more sophisticated, and social relations have transformed. For more than a century, business advantage largely came from scale, efficiency, and vertical control; the idea that producing more, faster, and more cheaply in a coordinated way was the dominant approach within the corporate world to deliver a competitive edge and shareholder value. Ford had initially standardised so much that you could have your Model T car in any colour you want as long as it was black. General Electric became the masters of optimising a portfolio of operations under expert management. Many businesses still operate on this basis today.

Pursuing scale and efficiency remains fundamental for competitiveness, but these alone seem no longer sufficient for stellar success in this new era. What is often called the external environment today looks a lot different from what it was just twenty years ago, when many of today’s leaders and managers first entered the workforce after learning about how past masters of business, such as GE’s Jack Welch, achieved so much success in his era.

Subscribe now

But today’s international business landscape is more interconnected and increasingly defined by different dynamics such as geopolitical uncertainty, climate considerations, and algorithmic decision-making. In this system, what once worked no longer seems enough. A different way of thinking and decision-making is needed. That’s because profit and wealth are being increasingly rebuilt on a new foundation of systems literacy, where the ability to understand and influence within complex systems from finance to technology, policy, or ecology determines who captures the most value and who is ultimately left behind. Today’s most successful firms, from data-driven platforms to green-energy pioneers who use resilient and adaptive strategies, illustrate just how much the system of international business has changed.

Systems literacy is a way of understanding the world as an interconnected whole, a “system of systems” in which well-placed small interventions can cascade into large-scale or even global impact. Examples include how Tesla has transformed car production into an integrated energy system that is reshaping global charging standards and industry structures, where its charging connector has become the de facto North American standard. Denmark’s Ørsted has evolved from a fossil-fuel utility into a global orchestrator of offshore wind ecosystems that now shape energy markets and supply chains worldwide.

The Hidden Systems Beneath Modern Wealth

Today’s Financial and Data Infrastructures

Across the world, capital and data now increasingly flow through algorithmic systems that shape markets in real time, defining the very parameters of commerce. Asset managers in North America are deploying AI in their investment processes, with those making the biggest impact aligning AI to strategy. In Europe, the European Central Bank’s Digital Euro and the EU Taxonomy for Sustainable Activities are embedding political goals and objectives into financial architecture. Meanwhile, in Asia, Alipay and WeChat Pay are merging payments, logistics, and social data, which are transforming urban finance and everyday life, and complementing state investment in digital infrastructure, which is aimed at narrowing the urban–rural divide.

The Structural Power Shift

The new trade routes have moved. Today they are digital platforms hidden in cyberspace where big tech firms such as Amazon and Alibaba excel at orchestrating the real-world logistics and market access. Algorithms now increasingly shape what consumers and firms around the world perceive as what the market actually is.

For most of the modern era, power tended to live inside key institutions such as governments or corporations. However, more recently it increasingly lives within the systems and control architectures that can even define what counts as a market in the first place.

But political leaders have found a way to re-exert control by regulating what is deemed acceptable behaviour in their jurisdictions. This development is a signal that platform governance and environmental considerations have become a central field of political economy. Policy is now embedded in data and technical standards. For example, the European Union’s 2018 GDPR data protection law and its 2022 Digital Markets Act attempt to rebalance this structural power by regulating the gatekeeping power of the largest digital companies. The 2022 U.S. CHIPS and Science Act has reconfigured semiconductor supply chains around national security objectives. Meanwhile, Japan and South Korea are using industrial strategy to secure energy and materials, with Japan’s GX Strategy and South Korea’s Framework Act on Supply Chain Stabilisation Support for Economic Security being good examples.

The EU is an interesting case as it increasingly exerts global regulatory influence in ways that have become known in political science circles as “the Brussels Effect”, a term coined by Columbia Law professor Anu Bradford. This phenomenon sees the EU’s large single market use its market power to regulate industries ranging from big pharma to big tech, to the extent that European internal rules effectively become global norms. The 2023 Carbon Border Adjustment Mechanism (CBAM) is a good example of the EU exporting European norms globally by compelling compliance with its regulations. Today, it has become more efficient for multinationals to scale a global product that also meets these European standards rather than having to build separate products for different markets. So the standards set in Europe are exported globally.

While the Brussels Effect is primarily regulatory and market-access driven, there are other power dynamics at play in the international economic system. China, a global economic powerhouse in its own right, has its own domestic strategy that blends industrial policy with digital surveillance infrastructure and is now actively exporting that model through initiatives like China Standards 2035, which aims to move from being a consumer of international standards to a producer and exporter. An emerging “Beijing Effect” that could lock countries into Chinese technologies and standards is a different approach that has had some success in parts of the world despite Western resistance.

Accelerated Change

Once these emerging systems start reinforcing themselves, change should be expected to accelerate and become less linear. Each new layer of data, infrastructure, or policy will amplify the next. Generative AI models, whether built by OpenAI in the US or DeepSeek in China, are now scaling at a pace that would have been unthinkable just a decade ago. Their growth is driven by a very simple loop where more data enables more computation, and more computation in turn produces more data. Stanford’s recent analysis shows how quickly the centre of gravity has shifted, where nearly 90% of notable AI models in 2024 originated from industry, up from 60% in 2023. In other words, the frontier is increasingly corporate.

All of this compute means that more energy should be expected to be consumed in the coming years, at a time when concerns continue to grow among policymakers about the impact of climate change on their societies. Thus, political power is also increasingly asserting itself in this domain. Initiatives such as the EU’s 2020 European Green Deal and the 2023 Fit for 55 packages, the 2022 U.S. Inflation Reduction Act, and China’s growing dominance in renewable technologies are accelerating the energy transition through a positive feedback loop between policy, capital, and innovation.

Five Ways Forward

So what can businesses do today to become more systems fluent in an international environment that is becoming less linear and more complex?

Here are five suggestions to make that leap based on current thinking:

1. Map the Systems That We Operate In.
   First of all, systems mapping can be a useful way to visualise interdependencies and move away from linear thinking. It’s like moving from playing checkers to playing chess. Network theory is also useful in revealing leverage points and risks. A small shift in one area can produce big changes everywhere.

2. Integrate Regulation Into Strategy.
   Situational awareness is important, so decision-makers need to watch out for the regulatory signals. New regulations signal where structural change is moving towards. In Europe, firms such as Siemens have aligned with EU sustainability frameworks, turning compliance into an advantage. These types of signals can be picked up earlier in the legislative cycle, before new regulations even become law. This early knowledge provides a significant advantage.

3. Invest in Interoperability.
   Innovation is forever important, but so too is interoperability. That means building platforms that plug into emerging standards. The 2024 EU Interoperable Europe Act shows how shared standards can drive resilience and growth.

4. Prioritise Trust and Legitimacy.
   In today’s economy, ethics has moved from the margins of corporate life to the core of business strategy. Transparency and ethics are now often preconditions for market access. Ørsted’s renewable transition is in many ways an instructive example of this.

5. Cultivate Systemic Thinkers and Translators.
   Adapting also means having the right people, in the right place, at the right time, who are also thinking in the most useful ways. Build an eclectic team that spans disciplines and mental models, combining economics, technology, strategy, and policy insight. This will enable better anticipation of future trends and the articulation of them from different perspectives.

Closing Thoughts

Peter Senge once described organisations as “learning systems.” The systems thinker, Donella Meadows, taught that leverage lies in feedback and structure. Today, those ideas increasingly define competitiveness.

Systems literacy can help leaders to anticipate nonlinear shifts and build resilience. Scale and efficiency still matter in business. They are necessary but no longer sufficient. Understanding how systems interact in the interconnected global economy and then positioning strategy accordingly is an approach that should also be incorporated.

Subscribe now

In most companies, we’re often led to believe that the org chart tells us everything we need to know about how the business works and what our role is within it. The arrows and boxes tell us who should report to whom, who has responsibility over each particular area, and who is ultimately in charge.

It’s a comforting picture of how a business should operate and probably a lot closer to what we may think is the case on our first day on the job, straight out of university. But if only everything were so linear and structured, we would never have to worry about distractions such as office politics or internal power plays and just focus on getting the job done. Life would be more straightforward.

Anyone who’s spent time inside a modern business organisation knows that the official hierarchical structure is only part of the picture, or at least they often have that feeling that there is something else at play because the big decisions that are often taken don’t always neatly align with business priorities or the formal structures we would expect. Things often pan out differently when strategies that were supposed to drive the business forward actually stall or fade away from the agenda, and people with no official title somehow manage to exert more influence over the direction of the business than those officially higher up on the org chart. Silos and fiefdoms sometimes develop while at the same time higher management is encouraging team collaboration.

Sometimes we are left scratching our heads after a team meeting wondering how the latest decisions taken are in any way aligned with what the business strategy is supposed to be. The CEO says one thing at the annual get-together, but that is not how things are done locally. I remember a regional manager once telling me that in his view, head office makes the strategy sound so simple; he left motivated after the annual kickoff event, but within a week he felt he was back to fighting trench warfare.

Without figuring out why this happens, it is no surprise that the workplace environment can lead some to become demotivated, cynical or even worse for the business: they start looking for a new role elsewhere. Sometimes it is really only the fear of running into the same kind of environment elsewhere that keeps people in their existing roles.

To figure out why things don’t turn out as we are often led to expect, it is useful to look to another part of society where we see this same type of phenomenon: political life.

In the political world, at least the democratic world that I am most familiar with, there is also an official type of org chart with the head of state at the top, the government and the various local authorities and state bodies who are tasked with implementing the policies that people voted for. But it doesn’t always turn out that way: programmes are abandoned, or decisions are made on matters that nobody voted for. For example, almost nobody votes to go to war out of choice, but it seems to happen more often than it should in some countries.

The thing to realise is that power has more than one face; it isn’t just about structure, it operates inside a system of relationships, incentives, and constraints. This is exactly what British political scientist Steven Lukes uncovered in his classic “three dimensions of power” model. He wasn’t thinking about corporations when he developed it, but political science and business often blend into each other (many business models have their origins in political science), especially when it comes to change, conflict, or transformation. Lukes gives us a sharp lens for understanding how power actually operates. It is particularly useful to adapt it to a business setting because so often in business we’re grappling with internal complexity.

The Political Science Model

Lukes’ Three Dimensions of Power challenged the old idea that power only has one face, that it is only about who wins a debate or a vote. That’s just what we see at the surface. But below that social veneer there are two deeper, subtler layers of influence: what gets discussed, what doesn’t, and what people believe is even possible.

Here is how the model works:

Different approaches have been used to illustrate this model graphically, such as a pyramid and concentric circles with visible power in the centre. However, I think the iceberg approach works really well in illustrating the power that is visible on the surface but invisible below. The power below the surface explains that feeling we may often have that there is something else at play than the official priorities.

The Three Faces of Power:

Visible Power (overt power)

This is the power we can see, such as who prevails in a formal decision or vote. Examples also include a budget signed off, a key leader appointed, or the approval of a new strategy.

Agenda Power (the mobilisation of bias)

Agenda power is about who decides what even makes it onto the table for discussion. For example, we may have a transformative proposal that could drive new business in new areas, but if we can’t get it on the agenda, it's not going to happen.

Ideological Power (deep cultural assumptions or unspoken norms)

Ideological power is even more subtle; it is about who shapes what people believe is possible, normal, or acceptable. For example, cultures that make disagreement feel like an action of disloyalty rather than constructive feedback, or status quo assumptions that are never allowed to be questioned. This can include non-discussion about business branding or mythologies about “what makes us successful”, even when there are better options that even higher management would like to hear if only the idea could reach up to them.

Power is often about outcomes, but this model shows that power is also about the battles that never get fought.

Why This Matters for Business

This is political theory that I am applying to the business world because it has a real practical use. Once you see it, you really can’t unsee it.

In today’s organisations, all three faces of power show up in strategic and subtle ways, for example:

• Visible power is the visible structure of the system that sits with formal leadership such as executives, budget holders, and boards. This type of power is clear, necessary, and trackable, but it is also often reactive.

• Agenda power lives with its gatekeepers that shapes system priorities. In the political world, this could be the chiefs of staff who decide who gets in to meet the president; it also includes respected insiders or the leaders of key projects such as dealing with a pandemic or a security issue. In the business world, they are the functional heads who shape the agenda inside their domains.

• Ideological power involves the informal dynamics that move the system. It is embedded in the business culture, in the lingo and language that is used, and the mythologies of what the business is about, why it is the best or even why the world is in a better place because the business is there. But it is also why some companies can’t read the signals and pivot, even when the writing’s on the wall.

A stalled transformation effort can be a good example of how these invisible powers play out. On paper, everyone’s aligned on the new strategy. But behind the scenes, there may be middle managers who keep “raising concerns”, putting up roadblocks or encouraging disunity with the direction of change. In situations such as this, it is the faces of agenda and ideological power that are doing counterproductive work.

So in moments of disruption or internal conflict, this model is helpful in unscrambling why formal authority alone wasn’t enough to overcome the other two dimensions of power.

How Teams Can Adapt the Model

Knowing that there is more than one face to power helps business leaders to take more control of the situation to better align with the business priorities.

Here are some thoughts on how to begin to apply Luke’s model explicitly in a business environment. These are practical ways to rebalance influence. And they reflect a growing awareness that managing power really means managing systems.

• Use stakeholder mapping tools to help track both formal and informal influence, that is to say who people listen to, trust, and follow.

• Organise agenda-setting rituals such as reverse town halls or open-priority weeks to create space for ideas to surface from within rather than the usual centres of control.

• Conduct culture audits; initiatives such as internal storytelling campaigns and norm-resetting activities help loosen the grip of ideological power, challenging what’s seen as acceptable or possible.

Power is Not Just Positional

In business, titles will still matter because good organisation needs a formal structure. But if we want to drive real change, we also need to see power as a system and read between the lines, to watch out for what’s not being said, to notice who’s shaping the agenda, and to constantly challenge the assumptions holding the system in place.

Last year, I made a short video about this topic on YouTube, which is available here:

There is never a dull day in business decision-making these days. It can sometimes feel like the system is disrupting everything, everywhere, all at once. Business leaders often describe volatility as the new normal. But volatility is only the surface expression of deeper system transitions.

Business decision-makers clearly face a dense network of increasingly interlinked risks, such as the ongoing energy shock emanating from the conflict in the Middle East. The conflict has driven up the international price of oil and gas in a relatively short period of time, discomforting balance sheets the world over. But there are also other risks to business operations, such as regulatory changes from carbon taxes to data localisation laws, changes to the terms of trade driven by geoeconomic considerations or significant digital disruption as AI increasingly embeds itself in everyday business operations and redefines the commercial landscape with new opportunities and emerging risks. Moreover, shifting consumer dynamics, from TikTok-driven product surges to Gen Z’s ESG preferences, means that sources of profit and growth should never be taken for granted.

This spectrum of risks reflects the constant interaction of political decisions, economic forces, social shifts, and technological breakthroughs. At its core is the question of how power drives structural change, which in turn drives the emerging trends in these areas. Understanding this interplay is at the heart of political economy, where markets and power often collide to shape new business realities and drive the next cycle of business headlines. Short-term noise gets a lot of attention, but what matters more is the underlying structural changes that generated it in the first place.

Subscribe now

The Need for Strategic Foresight

In an environment that feels more unstable and chaotic, it can be all too easy to focus too much on symptoms rather than causes. But such an approach makes finding a cure more difficult.

Scenario planning is one of the most effective ways for decision-makers to make sense of complexity. Applying it with systems thinking principles helps organisations not only to dynamically visualise how multiple factors interact, amplify, or counterbalance each other. It also helps to understand where change is emanating from and how reactions to emerging trends also feed back into reshaping the wider system. We may not be the biggest players, but sometimes small changes we make can also trigger larger changes later.

If we see our environment in systemic terms, we can see that the environment we are in is not separate from us. It is not a single external linear factor that drives today’s trends. We are also embedded actors, so our decisions and actions, as well as those of our partners and competitors, also feed back into the system. They help shape future scenarios.

Read more

Regular readers of this newsletter know that change isn’t new, but its increased pace and scale are new in our society when compared with how we used to live and work just over two decades ago, at the start of this century. Technology is a big driver, but so too is politics, which is increasingly driving economic, environmental and public health outcomes. From financial crises to tariff-laden economic nationalism, from global health pandemics to the dawn of self-thinking AI machines, even the most well-run businesses need to adapt to the world we are rapidly becoming.

This is increasingly an age where transformation often happens out of necessity rather than by choice. Drivers of change in one area subsequently drive change in others. Just think of the political decisions to introduce lockdowns during the pandemic, which changed how many businesses use technology and manage risk for the long term. I know of a medium-sized financial services business that was completely caught off guard by the pandemic. Nobody was able to come into the office during lockdown; but staff only ever worked on desktop computers and could not work remotely, so the business could barely function. But within the space of a year, it went from a 20th-century operation to a 21st-century operation where everybody brings home their laptop every night just in case a new crisis locks the site down tomorrow. Some might describe this transformation as learning by doing, but reactively transforming in a crisis is demanding and costly for a business and its staff.

Transformation is a process that takes time, so it is better to start early. It requires dispensing with the old and building a new system of practices and mindsets, so that means having a good sense in advance of the direction of change. And if change is to be done in a proactive, forward-looking way, then that process will need a coalition of enthusiastic change agents on the inside who are willing to influence and sustain change efforts at every level of an organisation for a considerable period of time.

Change agents are an essential ingredient to successful transformation. They are nodes in a system where information, incentives, and behaviours flow. But they also operate with bounded constraints, so if they are to succeed, they need to be brave, have a clear roadmap, the right tools to manage risk, and, importantly (but sometimes forgotten), have the visible support from leadership above. The last point gives them credibility.

Reinventing an organisation is a collective effort, and the bigger the organisation, the more difficult it can be to create a sense of urgency, change the culture, break down barriers, and embed new ways of working. Yet with the right leadership and process, it can be done, as former IBM CEO Lou Gerstner describes in his 2002 memoir, Who Says Elephants Can’t Dance?

In this article, I’ll share a proven practical framework to help identify and empower those kinds of change agents within an organisation, so that when change is needed, it can take root and deliver what was originally intended.

Read more

Turn on any cable news channel, and it is easy to see that business and policy decision-makers increasingly find themselves leading through chaos. Just a generation ago, the world appeared more stable, more predictable, linear, and manageable. But since the fall of the Berlin Wall and the end of the bipolar Cold War era, we’ve entered an era of accelerated, interconnected change, which has only intensified in recent years. In some respects, the Cold War brought a certain amount of stability to the world.

Subscribe now

However, the acceleration of globalisation and rapid technological change since then has compressed the global space and brought us all closer together. Humanity has become much more entangled. Today, an event on one side of the world can ripple throughout the rest of the world in real time. A few years ago, the COVID-19 global pandemic made this visible to all, impacting everything from public health to economic growth and supply chains. For those who still had any doubt, it showed how the whole world today has become deeply interconnected, where the emergence of the virus in Wuhan, China, led, in just a matter of weeks, to the lockdown of entire economies in Europe, North America, and further afield. Even the most local of businesses found themselves exposed to global events.

If you talk with decision-makers in politics and business about what is urgent on their desks, they will likely give you the sense of constant uncertainty, that they are leading their teams through chaos, where there is that constant back-of-the-mind thought that a new crisis could break out at any moment, requiring them to revise their plans and push in a new direction. The need to be more proactive in dealing with these challenges is something that pops up more often at offside strategy days. The biggest driver in this new norm is a shifting context.

Read more

Recently, I have begun the early stages of a research idea on system dynamics within the international system, which has led me to examine how approaches to political and business leadership have changed over time. Now and then, it is probably a good idea to get behind today’s news headlines and notice longer-term trends.

Intuitively, a wide sample of the decision-making styles of the top leaders in politics and business could be somewhat indicative of the overall approaches taken by many other leaders operating in the same system from different standpoints. There is benefit to observing top leaders in politics and business because of their tendency to be thought leaders for many others in their area. They set the tone. Effective leadership can sometimes accelerate or delay systemic shifts, particularly if they work in broader coalitions. Just think of what was achieved at Bretton Woods in terms of monetary policy, and how the system shifted dramatically when that coalition weakened and fixed exchange rates gave way to floating regimes.

The trend in leadership style is important because it can help determine how much leverage key personalities have (or don’t have) over the direction of the system they are operating in, and how that changes over time. This is particularly so in our current era where there are growing concerns about the machines taking over and running amok, and the breakdown in open and free trade in the international system.

Subscribe now

My interest in leadership tends to focus on political economy and on how the forces of politics and business interact in the international system as it evolves. Leadership styles in politics and business tend to blend into each other because politics and business are interwoven in the international system. Business decision-making and political decision-making often impact each other, so it is no surprise that leaders in both disciplines often borrow style and technique from each other.

We often hear historians say that history tends to rhyme with itself, so it is perhaps useful then to look back to an earlier period that in many ways mirrors our own, to see how leaders navigated some of the most complex political, economic, and corporate challenges of their time, how they leveraged their skill to reshape the part of the system they found themselves in and what those insights could mean for today’s leaders.

There is a bit of subjectivity involved here, but when I look at the international system, I tend to see cycles of familiarity over a period of fifty to say seventy-five years. Over that period of time, there is generational turnover, and the changing of the hegemonic guard is usually well underway. The priorities and challenges of the business community are often a function of the decisions of political leaders. The best strategically resourced corporate leaders are normally best placed to see the wood from the trees and so tend to adapt earlier than most.

If we go back just fifty years, we can already get a glimpse of this historical rhyming at play. I don’t remember the 1970s; I’m too young, but in historical terms that period had characteristics that rhyme with today’s international system. Obviously, it was a less technologically advanced time where people still used telephone operators and phone boxes to communicate and only the largest businesses invested heavily in computer technology. However, the broad trend of oil crises, rising inflation, proxy wars, and the earlier waves of modern globalisation testing leaders’ ability to navigate complexity are similar to the problems leaders navigate today, albeit in more technologically advanced societies. The 1970s were a pivotal time, like our time, that, in retrospect, seems to have marked a turning point in the leadership style of political and business leaders as the world sought to recover from the doldrums of interconnected polycrises.

Read more

We have all seen it at some point: an elected leader enters office with bold new promises but then quickly gets dragged down by time-sensitive crises and distractions. It tends to happen most of the time, even to the most promising leaders. Sometimes it can seem that a politician will promise anything to get elected; selling hope is, after all, attractive. But that is not always the case because there is often an honest disconnect between the optimism of what an aspiring leader believes can be done during an election campaign and what actually turns out to be possible afterwards. Some call it the realities of being in office.

An elected official may feel that they are busy working hard for the people who elected them, yet urgent matters consistently overshadow their broader policy goals and principles. After a couple of years in office and despite their best intentions, they now run the risk of losing public trust or even the next election. The calls to replace them start to grow. Politicians are usually judged on what they did rather than what they promised, so being able to deliver what was promised should be the top priority if they are to survive long enough in office to do the things they promised to do.

In business, there is a similar phenomenon at play; business leaders are also ultimately judged on what they actually deliver. But endless meetings can be a real time killer, where quarterly targets create relentless pressure. One quarter follows another, and short-term wins prioritised to keep shareholders on side can take precedence over long-term strategy. The leadership team may decide to push for immediate sales growth rather than new product development, only to find out later that they have now been outpaced by competitors. This can feel self-defeating, particularly if they had loyally prioritised shareholder demands in the short term but now face their ire because they have jeopardised long-term growth. How can a team of apparently great strategists fall into such an easy trap?

Business success is really about choices, and a big part of that is how we organise and implement our priorities. But that doesn't always happen. We may have a clear vision of our goals, but somehow still become so consumed by daily pressures of the system that our long-term objectives slip further into the horizon.

Read more

There is a well-known saying in political circles that goes, “if you’re not at the table, you’re on the menu”, which has become a sort of shorthand for how power really works in the international system.

The idea is that if you’re not involved in shaping decisions, then you’ll end up living with decisions that are served to you.

Here’s the former US Secretary of State, Anthony Blinken, making such an argument regarding the international system at last year’s Munich Security Conference:

In international politics, there is a hierarchy at play. At the top table of the international system, influence rarely rotates. While there are nearly two hundred soverign countries in the world, it is usually the same core powers, such as the United States, Russia, China, the United Kingdom or France, anchored as permanent members in the UN Security Council, reinforced through their roles in institutions such as the IMF and the World Bank, and extending across groupings such asthe G7, G20, and the BRICS that continue to, by and large, shape the global political agenda.

This table/menu metaphor really captures the rather blunt realist view that outcomes in international relations are determined less often (if at all) by the appeal to fairness or pure efficiency that many less politically engaged people might expect. In this view, it is more often the case that outcomes are determined by pursuing power, chasing relative gains and acting in one’s own interest.

But as was evident last year, not everyone in the international system would publicly endorse this worldview. When Secretary Blinken used the phrase to describe contemporary geopolitical engagement, China immediately objected, calling it “a stark zero-sum game mentality”.

But beneath this diplomatic sparring lies a much bigger question that matters just as much for business leaders today as it does for diplomats:

Let us begin with where this view originates

Read more

Change can often feel inevitable, yet somehow we can also feel stuck. In the workplace, maybe we have been trying to embed more agile ways of working. Or perhaps we have moved to a hybrid setup, but the business culture is dragging its heels behind the policy. Staff politely nod and agree in meetings, say all the right things, and use all the current buzzwords, but in practice, they change very little when they return to their desks.

Take digital transformation. We invested a lot of the budget in new tools with the expectation of driving productivity and efficiency, but their adoption just isn’t resonating. Most seem to be still clinging to the older way of doing things.

Such a scenario can feel like the system pushing back on us, but it is invisible, and nobody is openly saying why.

Read more

A few weeks back, I wrote a piece on business strategy using a case study of the fictional Unscrambled Beans Café, an independent speciality coffee shop based in a large international city with growth plans, to illustrate how business founders can begin to anticipate and adapt to systemic changes outside of their business.

I introduced a useful strategic planning framework that businesses can use to gain early clarity on external shifts that affect their future, helping them craft a strategy that prevents strategic drift and positions them to thrive in a changing environment.

This helps to map the broad, systemic forces shaping the business landscape. However, to build a truly resilient strategy, decision-makers also need to focus on the specific industry dynamics and competitive pressures they’re facing.

Read more

What is Strategy?

Organisations come in all sizes, from the one-man consultant working from a shared office space to corporations with their own tower building in the business district. But no matter our size or what environment we operate in, it is likely to be the case that not everything is within our control. That means we are always operating amidst uncertainty, those factors that can disrupt our goals.

The best way to deal with this uncertainty is to plan for it. The best way to increase our chances of achieving our goals is to have a strategy that serves as a vital reference point, defines our direction, and provides a clear roadmap that can adapt to change and inevitable shifts in the external environment.

Subscribe now

Leaders who don’t strategise or nurture a culture of strategic thinking are often easy to spot. They have familiar characteristics. They fall into short-term thinking, get caught off guard by change, make emotion-based decisions, and find themselves outflanked by more focused rivals.

Businesses operate in an adaptive dynamic system, and those businesses without a strategy are usually the first to be exposed when the system changes. So, in a world of accelerating disruption, strategy is how we stay grounded and how we move forward with confidence.

Some strategies are carefully designed in advance while others tend to emerge through experience. Strategic clarity is not the sole preserve of senior corporate leaders. It is just as important a tool for the independent consultant or the high street cafe owner. Often, it evolves through experimentation, workshops, feedback, and course correction carried out in real time. But every business needs one, and everybody in the team has something to contribute to the group’s strategic direction, and should.

Experienced business professionals will tell you that it is so much less painful to think through all of the potential risk factors before commencing business than having to find out the hard way later down the line.

Read more

Political risk is closer than you think; it is part of our daily lives, and it impacts most people.

If we heat our homes, drive a car, invest for retirement, use the internet, vote in elections, travel abroad, or deliver products and services, political decisions shape the environment we live and work in, often as much, sometimes more, than economic or financial forces.

While economic and financial risks are usually quite tangible and may seem easier to prepare for, what has become known as political risk is often the unpredictable hidden force shaping our workplace and the wider economy.

Economic and financial risks, which are often more familiar to most businesses, are normally tracked and modelled with reasonable accuracy using quantitative tools, particularly over short- to medium-term time horizons. For example, market volatility or the risk of recession.

Political risks, however, are a different kettle of fish because they can have a high impact, yet in many cases, they seem much more random because they are human-driven and not all humans act the same because not all humans think the same. They can be rational, but they can also be irrational.

Political decisions such as whether to default on a sovereign debt or to nationalise an industry are shaped by actors with divergent ideologies across the political spectrum who have different intentions, incentives, and capabilities. This, depending on the skill of leaders and the system they operate in, can lead to better or worse-run societies.

The world’s supply of critical energy products and minerals, from oil and gas to lithium and cobalt, often comes from politically unstable or strategically assertive regions that pose political risk. While some exporters are stable and cooperative, a concentrated reliance on a few producers increases vulnerability to shocks, supply disruptions, policy changes, and political manipulation. There is vulnerability because, without access to these inputs, many modern economies and the workplaces within them could grind to a halt.

Government mismanagement of the domestic economy is another source of such political risk. Such incompetence can drive up prices, undermining industrial competitiveness, and sending ripples through bond and stock markets, with real consequences for all areas of the economy from business growth to investments and retirement savings.

Political decision-making also has consequences for people's career success, where a sharp change in policy by a key trading partner, such as a decision to impose sanctions on a company or industry, introduce trade tariffs, limit immigration, or tinker with climate policy, can destabilise entire sectors of the economy, reducing the demand for labour growth.

Long-term structural shifts in societies, such as rising inequality or cultural fragmentation, can also leave them more politically polarised. In such societies, there is the risk that public stances on divisive issues such as climate policy or DEI can harm or enhance a business or individual’s reputation.

Moreover, in our highly interconnected world, political ideas in one part of the world can quickly export political risk to others. If a leading economy embraces economic nationalism in its policies, that is likely to impact exporters elsewhere. This creates disruption and instability because policies that promote nationalism conflict with the current norm of global supply chains, migration, and climate interdependencies.

Meanwhile, technological advances have transformed business operations and efficiency. But they have also expanded the tools available to governments and bad actors, enabling surveillance, industrial espionage, and the manipulation of public debate, both at home and abroad. These cheaper and more accessible technologies now increase the threat posed by rogue states and non-state actors to global markets and private citizens alike.

The problem is, in an increasingly fragmented, multipolar world, no overarching global authority exists to police the international system and manage such risks consistently, a reality political scientists term ‘international anarchy’.

Businesses, investors, and individuals face heightened uncertainty that political decisions will produce economic change that is not normally expected.

Thus, a strong understanding of political risk and learning how to deal with it effectively is essential for opportunity, agility, and maintaining a competitive advantage over the longer term. This requires appropriate political risk strategies in the planning process.

Three Key Strategies to Mitigate the Impacts of Political Risk

1. Understand the Political Landscape, Monitor What is Happening

The first and probably the most basic step in mitigating political risk is to know what is going on politically within the areas that could impact your business or career.

Use tools like PESTEL analysis (political, economic, social, technological, environmental, legal) to structure what you monitor, with an eye toward which factors are driven by politics.

What is key here is the quality and the reliability of the information. There is a lot of noise from political commentary and reporting, so you will want to trust credible sources that are knowledgeable, insightful, balanced, educational, and actionable.

In keeping abreast of political developments, you should be looking out for developments such as regulatory shifts, leadership changes, trade policy trends, policy proposals, campaign manifestos, emerging skills gaps, and social movements, both locally and globally.

You need to know why decisions are made. Political risk is dynamic, so early awareness allows for faster, better-informed responses. Surprise developments often have earlier signals (e.g., public debates or policy red lines) that indicate the potential direction of change, such as Brexit, the war in Ukraine, or the Trump trade agenda.

Tip: Create a watchlist of policy areas or countries relevant to your business, career, or investments, and follow trusted sources, analysts who also understand your industry, government information sites, regulatory authorities, and think tanks.

There are now many firms and independent political risk specialists, some better than others. Some may analyse with one particular lens, which can leave them open to confirmation bias, so it is best to follow or engage with those who take an eclectic approach.

Moreover, there is a lot you can do by yourself; there are plenty of internet sites and tools that allow you to receive filtered information on choosing topics that you are monitoring. Many universities now offer micro-credentials in international relations and business.

2. Scenario Planning, Think About ‘What-If?’

Having got a good measure of what is going on politically within the areas of relevance for your business or career, you can now begin to build political risk considerations into your future planning with this tried-and-tested strategic planning tool.

Scenario planning has its origins in military intelligence and was popularised in business by corporations like Shell in the 1970s.

The goal here is to develop multiple “what-if” scenarios, stories if you like, that account for impactful political developments such as policy shocks, geopolitical tensions, or regime changes that could happen, given the known facts and the emerging trends that you have uncovered.

Once you have done that, it is then possible to brainstorm your potential responses. Judgment and adaptability are key because while some political developments can be predicted (e.g., election outcomes), many others can involve unknown unknowns, and thus the probability of an event cannot be statistically measured in the way that much economic and financial risk can. Thus, preparedness becomes more important.

You will find that this activity will foster agility in your approach because it should become apparent that many factors often combine in complex ways to produce unpredictable outcomes, dynamic scenarios that would have been initially difficult to forecast due to the phenomenon of systemic feedback loops (for more on that, check out the Forces and Signals podcast). Moreover, political developments can have cascading effects (for example, sanctions on a country could lead to economic disruption and then migration to the country imposing the sanctions).

It will likely emerge that the political environment in which you are operating may not be progressing on a linear pathway, and thus, quick adaptation may be needed if one or a series of ‘what-if ’ events do unfold.

In a complex environment, scenario planning is a logical device that will allow you to bring a degree of order to that complexity and improve decision-making. As new information becomes available, identified scenarios can be updated and retested.

Tip: Remember, the goal here is not to predict the future; that’s a fool's game. Resilient businesses and professionals don’t predict the future; they are prepared for a range of futures.

Preparing for the possibility of multiple scenarios requires an investment of time, but it also helps reduce risk and puts you on a better footing in terms of cost, competitive advantage, and opportunity in comparison to the alternative of reacting to events as they unfold.

3. Don’t Get Caught Out, Diversify Your Exposure

Having assessed the political environment and prepared for possible scenarios that could transpire, another key strategy that you should follow to mitigate risk is to diversify your exposure to such risks. In short, don’t get caught out by putting all of your eggs in one basket.

For a business, that means avoiding overreliance on a single country, supplier, or political environment as a source for your inputs or a market for your outputs. A friendly country today could become a hostile country tomorrow. Whether you’re sourcing materials, allocating capital, or growing your customer base, diversification reduces vulnerability to sudden political shocks.

For individuals, this might mean expanding your skill set or at least focusing on more transferable skills (e.g., data analysis, project management, language fluency) so that if politics gets in the way of your career, you have other options. Moreover, it also makes good sense to spread retirement investments across geographies and asset classes aligned to your risk tolerance.

Tip: For businesses, operating in multiple countries or regions (with different political systems and risk profiles) helps avoid overexposure to a single government or regime.

Partnering with local firms or building products in multiple locations can also help reduce risk and provide political cover, particularly during times of politically driven trade wars.

For individuals, building your international work experience can help give you a global professional identity and a network that isn’t limited to one political system or country.

Moreover, choosing an employer in industries with a diversified global footprint gives you more career options than locally concentrated workplaces (e.g., a tech or financial services business gives you more flexibility than an inherently local government job or a lawyer qualified in local law practice, which may be significantly different elsewhere).

These days, there is an increasing awareness that systemic disruption is a constant force reshaping businesses and careers alike. It was always there as a risk factor, but lately it seems more pronounced.

Political change, economic shocks, and technological advancements can reshape how businesses operate. For example, election outcomes and shifts in leadership priorities can lead to dramatic policy changes, such as Brexit in the United Kingdom or the trade tariffs in the United States, that have disrupted entire industries. Similarly, unexpected inflation and interest rate shocks force businesses to adapt rapidly to evolving economic conditions.

While political and economic disruptions have forced companies to adapt, new technological innovations, especially the dawn of artificial intelligence, have evolved to become a key driver of transformation for business (and a headache for government regulators).

New technological disrupters such as artificial intelligence are rapidly reshaping business operations just as older technology such as word processors and electronic calculators did in their own time. In today’s workplace, responding strategically to such disruptions is also key to unlocking career advancement.

AI and the Disruption of Middle Management

Take the example of middle management. AI is significantly reshaping middle management as organisations increasingly prioritise efficiency, agility, cost reduction, and customer-centricity. This shift has fuelled interest in flatter organisational structures, sometimes referred to as "bossless" workplaces, where traditional hierarchies give way to more decentralised decision-making.

While it is fair to say that a completely bossless organisation is probably a fallacy, AI now enables companies to automate many traditional management functions, allowing them to move further in that direction. Recent research by Gartner suggests that 20% of organisations plan to use AI to flatten their structure, with some expecting to eliminate more than half of their middle management positions through 2026. This trend may be good for the business bottom line (at least in the short term), but it is not so good for its people.

Read more