Many of us who are involved in supply chain decisions, or invest in businesses that do, will no doubt have been paying attention to the Strait of Hormuz crisis currently underway amid the US/Israel-Iran war in the Middle East, which has played havoc with oil and gas prices in the market and delivery times for businesses, since it broke out in late February. Blockages are a major problem because, these days, roughly one-fifth of the world’s oil flows through this region.

When we talk about the “market,” such as the stock market, it can often feel like we are speaking about an independent natural force, as if we were talking about the weather or gravity. However, as the events in the Middle East continue to unfold, it becomes more obvious that when we look at the market through a political economy lens, what we are really dealing with here is the politics–markets nexus, a system shaped by different social constructs and changing power dynamics.

Markets and the political economy are structurally interdependent:

• Markets are what we see most clearly because they provide the mechanism for exchange. But business training has led many of us to expect that economic efficiency, open markets, and institutional authority are still the order of the day.

• However, it is the power plays, laws, and norms within the political economy that provide the “operating system” that enables those market exchanges.

Together, the marketplace and the wider political economy form a co-evolutionary loop within a single complex adaptive system.

Observable system dynamics amplify this interplay. For example, market success generates wealth, which the financial winners often deploy to lobby politicians toward their preferred market policies (e.g., generous subsidies, tax breaks, or tariffs). This, in turn, just entrenches their dominance in a reinforcing feedback loop, which some call the “swamp” that needs drainage.

Yet politics is also a force for good, acting as a balancing force. When market extremes emerge (which they are periodically prone to do), those that generated much of the success (say, tech monopolies or those benefiting from lax regulation or an environmental free pass) face the wrath of legislatures that respond with antitrust laws, fines, or carbon taxes to restore social equilibrium (though often with delay).

So, given these types of phenomena, if we are active participants in the marketplace, we clearly need more substantive information than just historical performance data.

We need to pay attention to what is happening within the wider political economy, because it is there that the laws, regulations, budgetary decisions, sanctions, and indeed the big decisions about war and peace are set, all of which can impact the value of investments from bonds to currencies, and individual share performance.

From pension funds to sovereign wealth funds, understanding the politics–markets nexus through a political economy lens is fundamental knowledge for business growth and managing wealth. Yet, while it would be expected that sovereign wealth funds consider political risk in their portfolios (given that they are created to help solve future political/economic problems), there are investment mandates, particularly in the private sector, that still don’t (I was on a conference call a few weeks ago, as the US Navy was reported as heading towards the Gulf, and the investment analyst presenting his firms outlook questioned if geopolitics really mattered for markets). Politics matters because of the short-term volatility it triggers and the long-term structural change that it leads to.

The political economy is where political institutions (such as governments, courts, and regulatory bodies) interact with economics and shape outcomes. The nature of this interaction pretty much determines the relative levels of high-trust or low-trust within markets.

For example, you cannot have a market for intellectual property (IP) if the political economy doesn’t enforce patents. You cannot have a rules-based trade regime if one or more of its architects are among the first to break the rules. So, businesses and, naturally, their investors, value stability over volatility or chaos.

When you think about it, a market transaction is, after all, just a socially constructed promise. The political economy that market investors operate in provides the “referee” (the agreed legal system) that ensures those promises are kept. Moreover, the strength of that system is what determines which promises can be kept.

A strong political economy of reliable institutions and norms should be expected to reduce friction in the marketplace. But a weak one, riddled with corruption or bureaucracy, tends to act like a burdensome “tax” on market actions. These domestic dynamics scale internationally.

Geopolitics sits at the heart of international political economy because of its power-oriented dimension. It’s geopolitical issues about geography, state rivalry, and security intersect with economic systems that shape global rules, trade, and the flows of natural resources.

Originating within international relations, it is a lens that studies the interplay of geography and politics in the anarchical global space. It helps answer questions about the risks posed by how territorial control, alliances, and security threats (e.g., wars, borders) influence economic outcomes, such as sanctions or supply chains, often pursued via “geoeconomics” where economic tools such as tariffs and export controls are used for geopolitical ends.

Today, geopolitics sets the macro guardrails for business and the markets their investors trade in. In many ways, the international game of geopolitics is rewriting the rules for business strategy and investor wealth through co-evolutionary loops with domestic politics. Non-state actors (e.g., multinational corporations and global financial institutions) are also increasing their influence. Understanding what is at play puts us in a better position to anticipate and mitigate its impact.

What Can Businesses and Investors Do?

So, how can we build these considerations into our decision-making when participating in the marketplace?

Well, for strategists across business, understanding the politics–markets nexus through a political economy lens is the difference between playing 2D chess and 3D chess. We can no longer win on “product” and “price” alone if the actual “rules of the game” are shifting.

In the first instance, to even know that rules are changing, we need

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When you think about it, the fundamental purpose of most businesses has long been to generate profit and create wealth for their stakeholders. Over time, the methods used to achieve that purpose have evolved, particularly as technological innovation has progressed, financial engineering has become more sophisticated, and social relations transformed.

For more than a century, business advantage largely came from scale and efficiency, the idea that producing more, faster, and cheaper was the dominant approach within the corporate world to deliver a competitive edge and shareholder value. Many still operate on this basis. Pursuing scale and efficiency remain fundamental for competition, but these alone seem no longer sufficient for stellar success. However, for various reasons, not least the social side effects and public pushbacks that these strategies have experienced, those levers increasingly seem to be reaching their limits.

For most businesses, 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.

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Complexity has become an everyday feature of our modern political and economic systems. It is a decision-making risk, a test of strategic clarity, and ultimately a source of increasing costs at all levels, from the world’s most powerful institutions and businesses to those that are much smaller.

It’s an all-too-common phenomenon today to find many voters struggling to make sense of the government’s latest policy reforms, or customers overwhelmed by too many product choices. Complexity in itself is not necessarily a bad thing or good thing, but from a political and business perspective, it has a cost, so we should ask how much of it is just too much.

Occam’s Razor offers us a useful rule of thumb. It is the idea that the simplest explanation or solution is often the best. But still, oversimplification is not a panacea either because if we strip away too much complexity, we could end up creating new types of dysfunction. So, the art seems to lie in managing the right degree of complexity, that is to say, enough of it to reflect reality and enable adaptability, but not so much that we lose the people we intended to serve.

Complexity and the Bottom Line

In business, complexity has a way of permeating most areas of the modern business operation. This is often clearly visible to the naked eye, where too many products and services, bloated organisational structures, and decision paralysis are all too common. That’s not to forget the increasing complexity also found on the outside, such as today’s unpredictable trading system.

There have been numerous studies from the consultancy industry, the field of management research, and empirical cases that have suggested that excessive complexity can often reduce productivity and business profitability through the fog of hidden costs driven by symptoms such as duplication of effort, slower decision cycles, and disengaged employees.

Prominent examples of where complexity has weighed too heavily on day-to-day operations have included the multinational conglomerate General Electric before its recent breakup. GE was a sprawling conglomerate with layers of bureaucracy that slowed innovation and blurred accountability. Its challenge wasn’t a lack of smart people but an excess of interdependencies facing an increasingly disruptive external environment that ultimately made it too big to succeed. When every decision requires cross-divisional alignment, agility becomes very difficult to achieve. A contrasting example was at Apple under Steve Jobs, who simplified its product line dramatically, focusing on fewer products with deeper integration, which brought speed, coherence, clarity, and a competitive advantage that drove growth in subsequent years.

The problem with complexity is that every additional variable or feedback loop can add further cost, not just in monetary terms, but often in less tangible areas such as information processing, coordination, and attention; costs that can escape a traditional accounts department. The scholar and Nobel laureate Herbert Simon called this the “bounded rationality” problem, where decision-makers can only process so much before outcomes degrade. Businesses that don’t respect these bounded limits often end up burning more time and resources on managing the system rather than innovating further within it.

Complexity in Politics

The same type of dynamic plays out in the world of politics. Modern governance is also challenged by complexity. It involves layers of regulations, interdependent ministries, and intricate policy trade-offs. Each is normally designed to solve pressing problems, such as wealth, inequality, or insecurity, but collectively they can create even more complexity that few voters can easily unscramble. The result is often public cynicism or populist backlash.

When voters perceive that their systems of government are too complex to understand, it is not entirely surprising that they will gravitate toward more simplistic narratives. In recent years, examples abound of populist leaders exploiting this by offering clear villains and quick fixes with slogans such as “close the borders” or “take back control”. These types of slogans thrive because they simplify a complex reality into emotionally legible a la carte choices.

But oversimplification also comes at a cost, because we still need to know how things work in order to make informed choices. Democratic legitimacy to a large extent depends on public comprehension of how systems distribute wealth and power. When complexity outpaces comprehension, democratic accountability is likely to erode. This is why reforms such as Sweden’s transparent fiscal framework, which ensures that citizens have insight into fiscal policy, are needed for restoring intelligibility and support.

Not Too Simple, Not Too Complex

Politics and business operate as adaptive systems, that is to say, they are networks of interdependent parts that must continuously adjust to feedback and change. Complexity is inherent to such systems. However, if we could eliminate complexity entirely, we would lose resilience. On the other hand, if we were to allow it to continue to grow unchecked, we would lose direction.

The sweet spot seems to be that point where systems maintain enough diversity and optionality to respond to shocks without becoming unmanageable.

In the political world, this means that we should be designing policies that reflect the real complexity of our economies (such as climate transitions or global taxation) while also communicating them clearly and accessibly. In the business world, it means offering consumers meaningful choices, but without overwhelming them. IKEA is a good example. Most people have shopped there at some point. They offer enough variety for customers to personalise their furniture, but still, not enough products to overwhelm them. Its legendary success hinges on managing immense internal complexity that remains largely invisible to the customer.

In both of these worlds, adaptive change is the name of the game. As the political scientist Charles Lindblom once said, policymaking is often the art of “muddling through”, that is to say, incremental adaptation rather than grand design. Businesses, too, thrive when they exercise caution and treat complexity as a dynamic variable to be balanced rather than eliminated.

Vanilla Isn’t Always a Good Strategy

While excessive complexity is costly, zero complexity can be equally disastrous if it strips away all distinctive value. In the political sphere, overly simple policies, such as blanket subsidies or tax cuts without corresponding fiscal balancing, often create long-term distortions to the economy. Meanwhile, in business, overly simplistic “vanilla” offerings that fail to solve a real problem or meet a market need can quickly lose relevance.

For many products and services, consumers now expect at least some level of choice, customisation, and depth in their experience. Netflix’s recommendation algorithm is a great example with how it manages immense complexity in its backend systems and data algorithms but delivers an experience that feels effortless and personal. Political systems can also work the same way. The European Union, for example, operates through layers of complex institutions and negotiations, yet strives to present simple, unified policies to its citizens and member states.

Managing how complexity is experienced is key. Well-designed systems tend to keep their external appearance clear and intuitive while handling the sophistication internally. It’s a bit like a duck paddling through a pond, all quiet on top, but a lot of activity underneath. The best product designs and public policies make participation easy, even when the machinery working underneath is anything but simple. The worst ones tend to do the opposite.

Making the Best of Complexity

So, to optimise complexity, managing it should be less about elimination and more about channeling it effectively. Here are five practical ideas drawn from political economy, systems thinking, and management strategy that can help master the challenge of complexity.

1. Apply Occam’s Razor, But With Context

Simplify only where it adds clarity, not where it removes meaning. If a layer, rule, or product variant does not serve a useful purpose, eliminate it. Unless, of course, it is something that holds the system together.

2. Use Systems Mapping Before Decision-Making

Visualising interconnections helps to expose where complexity adds resilience and where it just creates noise. This helps us to see which changes create unintended consequences.

3. Design for Comprehension, Not Just Control

In business, this means designing clear product architectures and decision frameworks that pass the “explain it to me on one page” test. If it doesn’t, more work is needed. In politics, it means translating policy into accessible stories and visual models that voters will understand.

4. Institutionalise Adaptive Learning

Complexity tends to evolve. So, it makes sense to build learning loops into our systems. The best systems evolve through feedback-informed adaptation rather than a top-down overhaul.

5. Balance Optionality and Coherence

Whether designing a product or a new regulatory framework, flexibility is needed, and that should be balanced with focus. There should be choice, but organised around a clear narrative or mission, so that there is also coherence.

Complexity and Power

In the realm of political economy, complexity itself has become a form of soft power. It’s a question of how it is harnessed. Nations that can manage complex systems such as financial markets or globally connected supply chains, project stability, and tend to attract more capital. Similarly, businesses that master complexity with nuance tend to become indispensable nodes in value networks.

It’s about aligning the moving parts without overdesigning the system. Amazon’s platform model, for example, thrives on structured complexity. It has millions of independent sellers who share the same infrastructure and follow clear rules. In governance, the European Union’s regulatory “soft power” works in a similar fashion, where it is able to export stability through the setting of standards in many areas, from chemicals to digital services.

Final Thoughts

Complexity poses a real challenge in both politics and business, but the answer should not be oversimplification. To succeed, our goal should be to make complexity more navigable.

Occam’s Razor gives us a good starting point: prefer the simplest explanation when all else is equal. But the right degree of complexity also has its place. Systems thinking completes the picture by recognising when complexity is essential for resilience, diversity, and adaptability. Between these two poles lies what is arguably the real leadership challenge of our data-intensive era: mastering the economics of understanding, because it matters how we spend and invest our attention.

In politics as in business, there is a well-known saying, “if you’re not at the table, you’re on the menu”, which has become a sort of shorthand for how power really works. The idea is that if you’re not involved in shaping decisions, you’ll end up living with decisions that are made for you. So, it’s important to engage multilaterally when it is in one’s interest.

At the top table of the international system, influence rarely rotates. The same core powers, anchored in the UN Security Council, reinforced through institutions like the IMF and World Bank, and extending across the G7 and G20, continue to shape the global agenda and the rules of engagement.

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:

This table/menu metaphor really captures the blunt realist view that outcomes in international relations are determined less often by the fairness or pure efficiency that many people might expect, and more so by pursuing relative gains and acting in one’s own interest.

But as was evident last year, not everyone in the international system publicly endorses 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 as it does for diplomats:

Is power really the only force that determines outcomes, or can smaller, less powerful players also shape the game?

The Realist View

The instinct of the political realist runs deep in both international relations and political economy. From Thucydides’ Melian Dialogue of ancient Greece to modern-day policy lobbying, the pattern is argued to repeat itself in an ostensibly timeless way:

“the strong do what they can, and the weak suffer what they must” - Thucydides

Using this view, financial markets may appear neutral, but they are built inside political systems. Equity prices, trade flows, and investment incentives are all shaped by who writes the rules, who enforces them, and whose interests they serve.

That’s one of the reasons why the metaphor resonates so strongly with many business leaders, because they know from experience that chasing efficiency isn’t enough. If a company, sector, or even a country isn’t part of shaping the framework that governs its operating environment, then it runs the real risk of being governed by somebody else’s framework. We also know this intuitively from history: those who win the war most often set the dominant narrative in subsequent history books.

Today’s political economy, with its tariffs, industrial policies, and strategic subsidies, makes this fairly explicit. From Washington’s Inflation Reduction Act to Beijing’s Made in China 2025, the market is no longer left to its own devices. The ideal of an open global free trade system seems over, at least for now, as political power is increasingly writing the terms of today’s trade.

This means that politics can no longer be treated as background noise in business. Thus, it makes strategic sense to develop creative ways to be part of the discussion to avoid being sidelined. We saw this play out in the automotive sector’s response to the U.S. Inflation Reduction Act, where American auto manufacturers actively engaged by ‘sitting at the table’ to shape the implementing rules so that they were operationally aligned to their existing supply chains.

The Challenge to The Realist View

Still, as we have seen, not everyone accepts the realist conclusion that power is destiny. There are many international relations theorists who would question Blinken’s metaphor and argue that the world has changed.

For example, there are the liberal institutionalists who argue that rules, alliances, and international institutions can tame raw power and that collective organisation can counterbalance dominance. The EU, WTO, and Paris Agreement all show that even small states can influence outcomes by locking larger ones into shared frameworks. The EU’s High Commissioner for Foreign Affairs, Kaja Kallas, comes from Estonia, one of the smallest member states. A reminder that scale and influence are not always the same thing. Businesses also benefit from leveraging alliances and standard-setting bodies to shape favourable environments.

We also have complex interdependence theory as described by scholars such as Robert Keohane and Joseph Nye, which reminds us that our globalised world makes even the mightiest mutually vulnerable. Today, the U.S. may dominate chip design, but it relies on Dutch lithography, Taiwanese fabrication, and African minerals. No single actor has yet managed to control the full system.

So, that inevitably creates strategic openings for smaller players who find themselves occupying valuable niches. Consider the case of Nvidia. Its dominance in the high-performance AI chips (GPUs) that are the “picks and shovels” of the artificial intelligence gold rush has made it indispensable. U.S. government trade policies use export controls that are based on the technology Nvidia developed. Recognising these linkages helps businesses to navigate risks better and identify strategic partners.

At the same time, dependency and structural power show that interdependence can cut both ways. As described by Dependency Theory in development economics, the world economy often reproduces a core–periphery structure where high-income countries control high-value sectors such as technology, finance, and governance, while lower-income economies remain locked into lower-value, extractive roles. Today, those patterns have evolved into new forms, such as semiconductor chokepoints, energy dependencies, and rare earth monopolies. These days, the tools of structural power no longer rely on colonies or gunboats, but on tariffs, export controls, and data regimes.

For those of us in business, this matters because supply chains are now geopolitical systems. Firms can no longer bracket out politics and optimise for efficiency alone. That would be a major blind spot in today’s political economy. Instead, they must balance efficiency with resilience, diversification, and strategic autonomy. To survive in this era of economic nationalism, businesses must think more like states or regional blocs by being aware of their dependencies and deliberate about their alliances.

Constructivists go further and argue that it is ideas, identities, and shared understandings that shape reality. The international system has no global government, but as Alexander Wendt famously noted, “anarchy is what states make of it”. Using this view, the realist worldview is itself a social construction. There is nothing inevitable or timeless about global power dynamics. It is the political process that matters. Small nations such as Norway (e.g., Oslo Accords) or firms like Patagonia have influenced global norms on peace, sustainability, and governance through credibility and moral authority. In today’s world, legitimacy compounds like capital and soft power can move hard outcomes. Ideas, norms, and legitimacy influence economic outcomes beyond material power. For example, cultivating strong reputations and ethical leadership can also open doors and shape markets.

Systems Complexity

Moreover, complex systems are nonlinear, and even the table/menu metaphor itself tends to break down because change doesn’t just flow from the top. Small, agile actors can shift the conditions of play by altering feedback loops, setting standards, or innovating in ways that others must follow. If we are not at the table, we can always invent a new one. That’s how Estonia became a global voice in cybersecurity (e.g., the Tallinn Manual), or how Nordic countries set the tone in areas such as green tech and corporate ethics. Business leaders should also think beyond linear cause-and-effect to anticipate tipping points and emergent risks.

Feedback Loops

In the world we live in, everything is connected. Politics and markets form one integrated, adaptive system. Every time there is a policy change, whether that’s another new tariff, a supply-chain incentive, or an ESG rule, feedback loops are also created that bring new advantages to some actors but also disadvantages to others.

Those already comfortably settled “at the table” tend to reinforce their existing advantages through policy capture or institutional design. Public Choice Theory explains why this is so. Concentrated interests (such as organised industries) have the resources and coordination to influence policymakers, while more dispersed groups (such as consumers or smaller firms) rarely do. That’s why even the most brilliant minds and smaller innovators often find the rules working against them, and why big constructive engagement matters.

But it is important to remember that influence in itself is not necessarily a bad thing. It does not necessarily mean corruption. In its benign sense, it just means understanding how systems evolve and ensuring that one’s voice is heard and is impactful in shaping their design. This is good for business because power tends to expand through active participation.

Moreover, sometimes it can be a disadvantage to be too comfortably settled around the table, locked into the old paradigm, because it also serves as a blind spot. We know from business the phenomenon of the innovator’s dilemma, where what makes a company successful can ultimately lead to its decline or even downfall. The same principle can also apply to politics.

Smaller Players Can Still Play

Whether we are talking about a small state, a mid-sized business, or indeed a professional hoping to climb the corporate hierarchy, influence without formal power is still possible. Still, we have to know where to look and what to do.

Here are some suggestions:

Build Coalitions: Coordination multiplies leverage. Smaller states use political groupings such as the G77 or Alliance of Small Island States to influence climate negotiations. Businesses also form industry associations or cross-sector alliances to shape regulation. Coordinated interest can substitute for sheer size.

Specialise and Become Indispensable: Everybody has an unfair advantage of some sort, whether that is geography, education, entrepreneurial, or culture. The periphery gains power by becoming irreplaceable. Examples include Taiwan in semiconductors, Denmark in wind power, or a firm owning a critical technology niche; indispensability tends to shift dependence outward.

Shape Narratives and Norms: Narratives are powerful in political economy. If we can control the story better, we can better influence what’s being discussed at the table or whether the table is relevant or legitimate. For example, in a world where legitimacy often drives markets, ethical leadership, sustainability narratives, and transparency can redefine competitive advantage.

Exploit Agility: Smaller players are usually more nimble and can adapt faster than bureaucratic giants that have all sorts of vetoes on their decisions. In volatile systems, speed and learning capacity can matter more than scale. Agility is power in a different form.

Multiple Tables

The table that realists describe, the one where the powerful sit and carve up political outcomes, is still probably the most important table in the international system, but today it is not hegemonic; it is not the only table, and the world no longer dines on its set menu.

It is surrounded by many other tables, for example:

• climate and trade policy tables

• digital governance forums

• open-source software consortia

• Environmental forums

Each one has its own dynamics and entry points. The opportunity for influence is no longer linear or hierarchical; it’s networked, and networking works best when there is more than one venue.

For those of us in business, that means influence isn’t just about having a seat at the biggest table; it’s about knowing which table matters most for our own goals and how to show up there effectively.

Final Thoughts

For a metaphor to persist, there is normally a degree of truth in it. In the end, the table/menu metaphor still stings because it’s partly true. If you’re not at the table, someone else is, and thus they’ll shape the rules, resources, and rewards that you will be expected to follow.

But that is just part of the story, in a world of interconnected systems and distributed influence, being “on the menu” isn’t inevitable. We can also build our own table, join others’, make the menu inedible, or change the ingredients of the menu itself. Just like the international system, political economy is what we make of it.

What if the very strategies that make a company successful can ultimately lead to its decline or even downfall? This sounds counterintuitive, a paradox even, but it is the very idea argued by the Harvard professor Clayton Christensen, in his book The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail.

Christensen had shown that industry leaders often fail not because they’re badly managed, but because they’re too well managed. They listen closely to their best customers, double down on profitable products, and allocate resources efficiently, all of which seem perfectly rational. But when disruptive innovations emerge, which are often cheaper, simpler, or more accessible, incumbents overlook them because they initially serve the smaller or less profitable markets.

But by the time these new technologies mature and capture mainstream demand, the established players are structurally and culturally locked into the old paradigm and become unable to compete or adapt effectively. It’s a phenomenon often found in the political world, where even the greatest armies can be defeated because they are best prepared for the last war rather than the current one.

A Systems Lens

Let’s look at this through a systems lens. The Innovator’s Dilemma isn’t just a business story; it’s really a story about how systems evolve, get stuck, and eventually get disrupted. Think of it as a story about feedback loops, momentum, and adaptive capacity. When things are going well, success tends to feed on itself. Then, wins lead to more investment, which in turn leads to more wins. That reinforcing loop builds power, scale, and efficiency. But there is a weakness because it also creates rigidity. This is because, over time, new forces such as emerging technologies or shifting social expectations start pushing back. The market pressure from electric vehicles is a prominent example of this balancing loop. Those are the type of balancing loops that nudge the system toward transformation.

But you can also see this same pattern in today’s world more broadly. Mature capitalist economies in Europe and America have optimised for efficiency and scale, but that very optimisation also makes them less flexible. As globalisation, automation, and financialisation have reshaped the landscape, old policy levers have started to lose their power.

Emerging economies, especially China, are increasingly the disruptive innovators who have learned to exploit these rigidities. They move faster, experiment more, and often adapt industrial and financial systems in ways that challenge the Western model from the outside, forcing it to evolve. In other words, they act as external disruptors in a global system that has grown too comfortable with its own success formula. The emergence of the nimble Deepseek AI in comparison to its much more heavily invested Western competitors is a recent example of this phenomenon. However, as emerging economies such as China mature and establish their own dominant players, they too will inevitably face the same dilemma.

Governments and political parties are often caught in a similar trap in their communications. Their traditional approach was designed for the broadcast era, where the centralised evening news primarily set the scene, but now often struggles to adapt to a digital world where information, influence, and legitimacy now flow through decentralised networks.

Meanwhile, in the financial and energy industries, the incumbents are living this dilemma in real time as central banks face fintech and digital currencies, and energy giants are caught between legacy assets and clean-tech transitions.

The real issue here is timing. By the time the feedback signals become clear, many systems are already deep into change, and small adjustments prove to be just not enough. From a systems perspective, disruption is not something that is random, that happens by chance; it’s really the natural correction that happens when a system has become over-optimised towards stability at the expense of adaptability.

Why It Matters

The key lesson for us here is to understand that, in the decisions that we make, the real risk lies in continuing to use yesterday’s success logic.

If our business models, products, or even career strategies are built entirely around stability, efficiency, or control, we may be just setting ourselves up for future disruption. That means the smarter move is to also build adaptive capacity so that we see disruption not as a threat but as a signal.

Here’s what that could look like in practice:

• Challenge the success formula: This means what worked before may not work next. The habits that created stability could easily become our blind spots.

• Create space for experimentation: Christensen argues that nurturing disruptive innovation often requires a separate structure, that is to say, a protected space with different rules and incentives.

• Invest in learning loops and sensing systems: We could build feedback mechanisms that help spot weak signals early, both inside the organisation and more broadly in the wider environment.

• Ask better questions:

  • We could ask ourselves, do we have an independent, dedicated team exploring disruptive models?

  • What are the “cheaper, simpler” alternatives to our product or strategy that we’re ignoring right now, and how could they one day disrupt us?

But the logic of the Innovator’s Dilemma should not be confined just to boardrooms. The wider environment could also benefit from the same mindset. Societies that can’t rewire their feedback loops, such as through reformed education policy, innovation policy, or civic renewal, also risk being overtaken by those elsewhere who can.

A few weeks ago, in an article I wrote about power, The Power Playbook: The Three Faces of Power, the insights of the political scientist Steven Lukes were discussed. He had argued that power operates at three levels: visible, agenda-setting, and ideological. In this framework, it’s not just who wins the debate that matters, but who decides what gets discussed and, ultimately, what people believe is even possible.

This is very much a layered understanding of power, and what it reveals is that authority and influence are rarely the same thing. The org chart might show who’s in charge, but it doesn’t explain why certain ideas still thrive while others die quietly in the meeting notes, never to be seen again. Moreover, the org chart fails to show who really shapes culture or how people actually internalise norms.

To build on those ideas, it is useful to consider that power, ultimately, is more about participation and connection than coercion. If we look at political theory or the literature on the corporate world, the most enduring forms of power tend to be relational rather than hierarchical. That is to say, they depend most of all on trust, alignment, and a sense of a shared purpose.

The Political World

In classical political thought, power was most often seen in terms of domination and hierarchy. Thomas Hobbes had described it as the ability to impose one’s will. For Hobbes, the sovereign’s monopoly on coercion was deemed necessary to prevent chaos. But over time, political thought evolved to reveal that power operates in much more subtle ways. Hannah Arendt, for example, has made the argument that “power corresponds to the human ability not just to act but to act in concert”. The idea here is that power arises whenever people come together around a shared purpose. In other words, it is relational and collective, not coercive or owned.

Michel Foucault deepened this insight by showing that power is everywhere, embedded in relationships, language, and institutions. It produces possibilities, shaping what people see as normal, rational, or legitimate. Antonio Gramsci’s concept of cultural hegemony offered a complementary power lens to this, where in his view, dominance is maintained not only through force or policy, but also by shaping the narratives people accept as “common sense”, a phrase that is frequently used in political discourse today.

Nowhere is this relational and cultural dimension of power more visible than in political leadership practice. Just think of South Africa’s former president, Nelson Mandela, who understood power as both connection and moral authority rather than command. In the new South Africa that he led, the prioritisation was on inclusion. Despite everything that went before, his leadership brought former adversaries into dialogue and framed reconciliation as a shared national project. Mandela’s approach in many ways exemplifies Foucault’s idea of relational power and Gramsci’s cultural framing, by replacing fear and domination with participation and legitimacy.

This distinction between domination and legitimacy runs deep in international relations. Max Weber had emphasised that authority, the stable form of power, depends on legitimacy. Without that relational dimension, power just devolves into mere force. Probably the best example of this was the fall of the Soviet Union, which was not so much a military defeat as a collapse of legitimacy. Its own people no longer believed in its inefficient command system.

A foundational concept for understanding this dynamic is Joseph Nye’s idea of “soft power”. Nations do not exert influence just through coercion (hard power) or payments (economic power); they also shape the preferences of others through the softer powers of attraction and connection. The United States’ global influence has, for decades, rested just as much on its cultural and institutional appeal as on its extensive military reach. Just think of the influence of Hollywood or its legal and governance system, and how they have influenced other countries around the world. A rising China, in turn, seeks to cultivate its own soft power through initiatives like the Belt and Road Initiative, blending financial leverage with relational diplomacy, though sometimes not without tension when connection turns into accusations of dependence, demonstrating the difficulty of converting economic strength into genuine soft power.

The same principle applies in economics. Markets, at their core, are really networks of trust. After all, money is only as powerful as the belief that others have in it. Financial markets function because of confidence rather than coercion. When trust is gone, confidence collapses. This was demonstrated during the 2008 financial crisis. In short, the real power behind markets, as in politics, is less about command and more about connection.

The Business World

In the business world, as is the case in the political world, power is often presumed to be synonymous with hierarchy. The traditional corporate pyramid, with the CEO commanding from the top, the managers controlling from the middle, and the employees executing at the bottom, in many ways mirrors the old sovereign model of power. While this is often the default position, modern organisational theory and management practice have evolved to show that sustainable power comes from networks.

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Recently, I have been looking at how political and business leadership have changed over the last fifty years. Every now and then, it is a good idea to get behind the news headlines. Leadership styles in politics and business tend to blend into each other. I have been trying to understand shifts in decision-making, power dynamics, and societal impact, and to see whether today’s leaders, when faced with similar challenges, stand on the shoulders of those who came before, or whether leadership is really something that evolves in fits and starts, capable of both progress and regression depending more on the environment it confronts rather than the personalities involved.

My thinking was that if history tends to rhyme with itself, then it is perhaps helpful 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 and what those insights could mean for today.

A lot has obviously evolved over the last fifty years; however, the mid-1970s were such a pivotal time that seem to have marked a turning point in the leadership style of political and business leaders. The oil crisis, rising inflation, and the first waves of modern globalisation tested leaders’ ability to navigate complexity.

However, while they all faced the same macro environment, this period reveals contrasting styles of leadership that continue to shape the political and business world today. Back then, President Gerald Ford approached the White House with a pragmatic, situational style; In the U.K., Prime Minister Harold Wilson tended to rely on a more democratic consensus approach at 10 Downing Street; while in France, President Valéry Giscard d’Estaing brought a visionary approach to the Élysée Palace with modernisation efforts, social reforms, and closer European integration.

In the corporate world, the titans of the era faced their own array of complex threats. CEO’s such as Reginald H. Jones at General Electric had a pragmatic, cooperative approach in dealing with sprawling operations and rising regulatory scrutiny, while the transformative visionary Walter B. Wriston at Citicorp confronted modernity by helping to build the technological and global financial networks, ATMs, electronic transfers, and cross-border currency systems that would transform banking. At Royal Dutch Shell, the leadership team fostered a culture of foresight that pioneered scenario planning, helping the company anticipate energy shocks and geopolitical uncertainty.

This got me thinking in broader terms about how different styles of leadership have evolved over much longer time frames and across various geographies. While there are also other influences on successful leadership styles in other parts of the world that emphasise harmony or community over individualism, one thing seemed clear: leadership style tends to move with history, changing form as societies evolve, economies expand, and institutions rise or fall.

It is not just about the “great man” who changed the game. It’s also about the system they operated in. Thus, yesterday’s leader could be situational or pragmatic, while today’s could be purposeful, visionary, or empathetic, depending on the roles, contexts, and constraints. Each era seems to redefine what it means to lead, sometimes through power, sometimes through persuasion, and sometimes through service to those they serve.

When you think about it, the story of leadership is, in many ways, the story of human history itself, and a big part of understanding the shifts in leadership style is the interconnected forces that shape decision-making and its outcomes.

Recognising these patterns and styles can help today’s leaders decide when to act decisively, when to inspire, when to collaborate, and when to adapt. By aligning leadership style with the environment and challenges at hand, leaders increase their ability to navigate complex systems and create lasting impact. A lesson as relevant today as it was fifty years ago.

Leadership: From Power to Purpose

Leadership throughout history seems to have always evolved with context, from command and control to connection, collaboration, and empowerment. It is a function of its times. In the earliest empires, authority rested on hierarchy and order. Pharaohs, emperors, and monarchs ruled through what the German sociologist Max Weber had called “traditional authority”, the idea that legitimacy was grounded in custom rather than consent. Yet custom alone was not enough because even autocrats needed to inspire belief. As the 19th-century French Emperor Napoleon had put it, “A leader is a dealer in hope”. Leadership depended not only on control, but also on the capacity to inspire others; to do that well, they also needed charisma, which Weber had called “charismatic authority”.

As societies became more literate and connected than in the time of the Pharaohs or ancient monarchs, power began to decentralise. From the Renaissance to the Enlightenment, literacy rates rose, print culture expanded, and the circulation of knowledge fostered increased public debate. The democratic revolutions of the 18^th century in the United States and France had given rise to participatory leadership, grounded in consultation and shared responsibility. Thinkers such as Rousseau and Jefferson contributed to the philosophical foundations of participative and consultative leadership, a political expression of Enlightenment humanism. Jefferson’s belief that “The care of human life and happiness, and not their destruction, is the first and only object of good government”, exemplified the view that governance should serve human welfare.

Leadership thus became less about command and more about coordination, which was guided by inclusion. In the early twentieth century, the management theorist Mary Parker Follett extended this ideal into organisational life, reframing power as “power with, not power over”. Her thinking offered an alternative to “the boss knows best”, marking a shift from power as coercion towards power to co-create.

Later, the industrial age introduced a new archetype: the visionary. Leaders such as Henry Ford and Thomas Edison looked beyond management to imagination, and their business leadership improved the quality of daily life for so many with their inventions and manufacturing know-how. As Warren Bennis, a pioneer of contemporary leadership studies, wrote, “Leadership is the capacity to translate vision into reality”. Alongside this emerged transactional leadership, the management of processes and systems that sustained scale. Peter Drucker, the management expert, articulated the distinction between management and leadership: “Management is doing things right; leadership is doing the right things”. Together, these approaches powered the corporate age.

By the late 20th century, the political scientist James MacGregor Burns, an authority on leadership studies, defined transformational leadership as the ability to “raise one another to higher levels of motivation and morality”. Nelson Mandela, Steve Jobs, and Jacinda Ardern are probably among the best examples that come to mind of leaders who embodied this blend of purpose, empathy, and clarity.

Around this time, a coaching and servant leadership style further deepened this ethos. The Silicon Valley coach, Bill Campbell, famously summarised leadership as arising from people: “Your title makes you a manager. Your people make you a leader”, while the leadership consultant Robert Greenleaf’s servant-leader “serves first”. This is the type of similar moral sentiment that the former US President John F. Kennedy had earlier expressed in his inaugural address: “Ask not what your country can do for you, ask what you can do for your country”.

Modern leadership tends to be less about hierarchy than systems thinking and nuance. It adapts to complexity through flexibility and feedback. Situational theory from Paul Hersey and Ken Blanchard emphasises adjusting style to context, with direction when needed and delegation when possible. Today’s highly successful leaders have tended to blend vision, empathy, and adaptability. Satya Nadella rebuilt Microsoft’s culture over the last decade around learning and purpose. He led a profound cultural and strategic transformation by fostering a growth mindset, breaking down silos, and emphasising customer empathy in the face of digital disruption. By pivoting towards the cloud, AI, and open-source collaboration, he demonstrated how digital transformation requires a leadership style that not only drives technological change but also cultivates a culture of trust, collaboration, and continuous learning. In the political field, the former US President, Barack Obama, has also focused on the importance of empathy in fostering change and transformation in society. As Peter Senge once observed, “Leadership is the capacity of a human community to shape its future”.

Leading Through Change

Leadership, just like political economy, is a living system. It changes because we do. Every generation inherits lessons from the past but has to interpret them for its own time. They stand on the shoulders of those who came before when they evolve and adapt to solve today’s challenges. There’s no single way to lead that always works; what matters more is understanding the moment we are in. The best leaders can read systems as well as people and balance clarity with curiosity and authority with empathy.

Looking back over the past fifty years, leadership has shifted through progress and regression, always shaped by the context around it. Back then, the industrial titans had priorities that fit the times. Today, humans have become more important. Empathy, connection, and trust are now strategic strengths in politics and business alike. From Pharaohs to the tech titans of today, one truth endures: leadership changes because the world does, and our task is to connect the lessons of the past to what the present requires.

I have recently been reading about how, throughout history, the sea has been both a highway for commerce and a battlefield for power. From the spice routes of the Indian Ocean to the naval blockades of the World Wars, control of maritime lanes has shaped global prosperity and national destinies. Scholars such as Alfred Thayer Mahan and Nicholas Spykman argued that mastery of the seas lies at the heart of international influence, a reality still reflected in today’s trade patterns.

That got me thinking in broader terms about how the sea is also a useful metaphor for the global political economy. Trade and conflict remain the core forces shaping international relations, while politics acts as captain and navigator, steering flows of investment, resources, and opportunity across shifting waters.

The Sea as a System

The world economy functions like an interconnected ocean defined by currents, tides, and storms. Disturbances in one region tend to ripple globally. When politics prioritises trade, it raises the tide, lifting most boats. Open access to ports and secure sea lanes are crucial milestones that enable goods and capital to flow, driving growth through comparative advantage and shared opportunities.

War, however, is different; it is collective violence. It acts like an undertow, dragging progress under. As Clausewitz observed, it is the continuation of politics by other means. It represents a breakdown of diplomacy and is engineered by political leaders seeking relative gains. Those exposed to fragile routes or alliances tend to bear the greatest risk. The victors of violent conflict tend to reshape trade in ways that are best aligned with their priorities.

Trade, however, can itself generate disruptive undertows: large job losses in vulnerable sectors, intellectual property theft, discriminatory trade practices, and the turning of interdependence into leverage can lead to heightened tension and open conflict. And while war’s destruction is undeniable, it has also historically fueled innovation, from radar to the internet, boosting civilian standards of living, but also disrupting traditional industries.

Politics as Captain and Navigator

It is political leaders who decide if nations ride trade’s tide or succumb to the undertow of conflict. Nations come in all shapes and sizes: some are like aircraft carriers, commanding the ocean and setting the currents. Others are smaller vessels, such as a tugboat or frigate, that have little choice but to adjust their course and follow the path carved out by the larger fleets.

After the 2008 crisis, key governments in the largest economies acted as captains steering through turbulence, flooding markets with liquidity, and calming investor nerves. Smaller nations followed these currents with borrowing and investment.

Post-COVID, the tides shifted sharply: inflation rose, energy routes faced disruption, and great-power rivalry intensified. At this point, politics managed to navigate through this crisis by pivoting toward resilience over efficiency, tightening monetary policy, and prompting supply chain realignments. These dynamics demanded that businesses rethink routes and trim their sails.

Institutions: Masters of Arms and Lighthouses

Institutions, meanwhile, act as a sort of master of arms. They enforce the rules, keep fleets in line, and maintain order within the lanes. Central banks such as the Federal Reserve or the ECB, trade organisations such as the WTO, military alliances such as NATO, and financial regulators all seek to shape how trade, war, and politics interact by ensuring the rules are applied and consequences observed.

But even so, the master of arms is not infallible. Policies imposed by governments or political blocs, such as sanctions, tariffs, or sweeping regulations, can backfire or create unintended risks, and institutions have to respond within those constraints.

At the same time, institutions can also appear like steady lighthouses, guiding vessels through dark or stormy waters. Yet they don’t always shine for the common good. Built and maintained by politicians, they can float with the currents of rivalry and power. So, business leaders must see institutions as both enforcers and imperfect guides; they are anchors of order, but they can also drift, refracting rather than clarifying the light.

Weather, Fog, Icebergs, and Wind Shifts

Every voyage faces weather. In the political economy, it could manifest itself as inflationary storms, economic winds, and diplomatic squalls. Hidden dangers lurk beneath, too. Fog symbolises uncertainty and misinformation, for example, ambiguous AI regulation, cybersecurity breaches, and grey-zone conflicts disrupting trade under the radar. Icebergs are those sudden shocks, those Titanic-like moments where debt crises, fragile supply chains, and climate disasters erupt without warning. Meanwhile, wind shifts reflect sudden changes in sentiment. That could be investor selloffs, consumer panics, or backlash against inequality. The seas are inherently unpredictable; reading these forces is as essential as knowing the tides.

Navigating the Political Economy: A Leader’s Mandate

Trade, conflict, institutions, and shocks tend to form feedback loops. A storm in one place sends ripples worldwide. For example, EU sanctions on Russian energy reshaped routes, forcing fleets to adjust. The rerouting of energy trade away from Russia, for instance, directly inflated European manufacturing costs, while simultaneously handing a competitive advantage to U.S. producers. This is a prime example of how systems change matters and a reason why business leaders must move beyond observation to active navigation.

Here is a practical voyage plan:

• Chart Your Exposure: Map supply chains, markets, and inputs such as sea lanes. Identify vulnerabilities to geopolitical undertows.

• Build Resilience, Not Just Efficiency: Maximise redundancy, diversify suppliers, and improve agility to weather inflation, regulation, or conflict.

• Read Institutional Signals: Treat central banks, regulators, and trade bodies as both lighthouses and masters of arms. Monitor their directives as early warning for capital and market shifts, and remember to pay attention to who their decision-makers are.

• Scan for Grey-Zone Threats: Hidden risks, such as disinformation, cyberattacks, or economic coercion, can cause costly disruptions. Scenario planning and intelligence are indispensable investments.

Recent surveys reveal 76% of business leaders now rank geopolitical risk as a top concern, with supply chains under pressure due to geopolitical rivalries and trade protectionism. The global trade outlook shows slowing growth with trade wars, including newly announced tariffs, projected to reduce global GDP. One recent analysis suggests by 0.5% and world trade volume by 3.4% by 2030. The WTO plays a critical role in mitigating fragmentation and protecting the rules-based system to maintain global economic stability. But this is only possible with the support of its members, which is an open question.

Geopolitical fluency is no longer optional. Leaders who master these currents will navigate their organisations through turbulence and uncertainty, building vessels robust enough to sail an ever-shifting global ocean.

Long before nations, corporations, and stock markets came into being, human beings throughout history have been asking themselves these timeless questions:

How much protection do we need? And how much should we trust in freedom?

Ancient philosophers such as Plato and Aristotle had thought about these issues. Later, political philosophers such as Hobbes and Locke had provided the initial frameworks for this dilemma. The pessimistic Hobbes 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 debate is still alive and well, not just in the political science departments of universities, but also outside the academy; this perennial debate is at the core of how societies are governed, how people go about their work, and how we invest for the future.

But it would not be accurate to say that security and freedom are simply opposites; rather, they are more like twin forces that oscillate within every system, pulling and pushing, shaping outcomes. Too much of one and not enough of the other can intuitively feel wrong. Just like a scale that can tip too far in either direction, the systems we operate in seem to always be in a scramble for balance.

If we think back to just the middle of the last century, when the Cold War divided the world, nations had discovered that while security can make you feel safe, too much of it could become a trap. During this time, endless stockpiles of nuclear weapons built tight feedback loops of fear, creating a dilemma where one side’s defence became the other’s threat. The end of this period saw the Soviet system collapse and the world transform. That collapse showed that too much security without enough freedom left the system unable to adapt. Later, after the events of 9/11, Western societies once again tipped the scales, sacrificing personal freedoms for protection against unseen risks.

In workplaces and job markets, a similar story has unfolded over time. The loyal Japanese salaryman (サラリーマン) found stability in his work life, but at the cost of creativity. Meanwhile, restless Silicon Valley workers who have embraced freedom also discovered job volatility and burnout. Investors also face this same sort of dilemma: bonds offer financial safety, but with little growth, equities offer the promise of greater freedom through higher returns, but they are also exposed to wild swings in the market. Everywhere, it seems, the same dynamic is played out with political, financial, and workplace systems tugged between the comfort of security and the energy of freedom.

But the more security we build up, the more brittle the systems also become. We have seen many examples of this quest for certainty across society. Nations have been locked down, employers have demanded loyalty from their employees, and investors have often clung to guarantees. Taking the demand for security to its extreme, we would have maximum security, a prison or police state where rules smother creativity, and feedback is stifled. Yet rigidity leaves us unable to adapt when shocks arrive.

On the other hand, too much freedom has brought chaos, such as financial crises, political instability, and, increasingly today, precarious gig work that leaves people vulnerable without any safety net. Taken to its extreme, this quest for unknown possibilities can become aimless drift, characterised by a lack of structure and purpose, where opportunities without anchors leave individuals and systems adrift.

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When we talk about change, we often focus on new policies, trends, or structural reforms. Change derives from decision-making. Sometimes government plays a role, a business or industry may be a key player, or the market is the main driver. These shifts are often visible, and we have a good idea of who the decision-makers are. However, beneath the surface, the shaping of those decisions that bring about change is often nudged and shaped quietly by more powerful interests.

It could be environmental regulation, tax reform, antitrust enforcement, or ESG reporting standards. In an ideal world, government policy should be made to serve the greater good; that’s why they are elected, that is the game. However, in reality, there is often a game behind the game where policy is often influenced, steered, and sometimes captured by those with the power to do so.

Understanding how policy gets captured, and by whom, really is essential for anyone serious about transformation. Leaders who fail to understand this risk may end up designing strategies or reforms that stall, backfire, or get quietly rewritten. Those who do understand it can better protect their institutions, shape fairer systems, and build resilience.

Policy Capture: What It Means

Interest groups have, of course, a legitimate right to explain their viewpoint to lawmakers. However, Policy capture does not occur in a vacuum; it often reflects and reinforces broader social and economic inequalities. It occurs when public decisions are disproportionately shaped by vested interests at the expense of the broader public or long-term good. This can happen in politics, but also in corporate governance or regulatory agencies. It can happen anywhere rules are made.

It’s worth clarifying that lobbying and policy capture are not the same. Lobbying is a tool, the act of trying to influence policy, often legally and transparently. Policy capture is the outcome. It happens when policies end up disproportionately serving specific interests rather than the broader public. Lobbying can drive capture, but capture can also happen quietly, through internal advisers, regulatory bias, or dominant firms shaping standards. In short, lobbying is one piece of the capture puzzle, not the whole game.

Institutional theorists, such as George Stigler, Mancur Olson, and Douglas North, and international organisations, such as the OECD and the World Bank, have long noted how capture erodes trust, weakens institutions, and distorts incentives. Capture does not always appear corrupt. It can be subtle, legal, or normalised, in the sense that it is embedded in lobbying rules, campaign finance, or the ways professional expertise frames what should count as “sound policy”.

Forms of capture include:

• Regulatory capture – when regulators serve the interests of the industries they oversee.

• Cognitive capture – when decision-makers internalise the worldview of insiders, advisers, or powerful donors rather than broader stakeholders. Policies may look sound on paper, but are actually out of touch with public needs. Controlling the narrative is a key power play.

• Legislative capture – This is when lobbying, campaign financing, or revolving doors skew the laws that end up on the statute book.

• Standards capture – in business and global governance, where dominant firms are well placed to shape ESG, audit, or sustainability rules, they could do so in ways that lock in their advantage over others.

In each of these cases, influence becomes a tool not for the type of adaptation or innovation that could drive growth, but for insulation, protecting incumbent interests from disruption, accountability, or competition.

The dynamics of capture reflect those of the prisoner’s dilemma: each actor, pursuing narrow advantage, may end up contributing to a collectively worse outcome than would have been the case. For example, a rules environment that is less fair and harder to reform. Over time, policy capture can lock institutions into suboptimal situations where trust erodes and innovation stalls. A win for the few can result in a loss for many more.

Why It Matters

Policy-making is not always just a neutral response to current or anticipated problems; it is also a terrain of struggle among competing interests, where each player is trying to define the problem on their terms and offer solutions in ways that suit them, but may not suit you or your business.

That’s why bold policy ideas, even by the most inspiring leaders, often stall, while watered-down compromises find a way to sail through. That’s why transformative reforms rarely survive implementation as originally intended. Politics is about compromise, but policy capture tends to be driven by those who are not elected. When policy is captured by vested interest, it’s not just about what’s right or efficient; the focus is on what’s strategically possible in a field of asymmetrical influence.

Business and Government Aren’t Immune; They’re Both Players

Influence isn’t just external. Even ministers can be captured by their own staff: when advisers steer decisions toward their own preferences, policies can drift out of touch with the people they’re meant to serve. Scholars call this a form of cognitive or internal policy capture, a form of bureaucratic drift in principal–agent terms. Recognising this inward pull is as important as spotting external lobbying. This is particularly true for politicians who are not experts in their brief.

In the business world, the dynamics are similar. Some companies will undoubtedly win from policy capture. It may be justified using the political term of “soft power,” which in this scenario includes influence over standards, lobbying regulators, shaping public narratives, or staffing government advisory boards. Examples of capture include tech platforms that help draft data privacy rules. Oil majors that shape climate transition pathways, or the titans of finance who write the rules for “responsible investment.”

Sometimes the goal is to block change. More often, it's to shape change in a way that transforms without threatening core power. Ironically, many transformation programs in business, such as DEI, ESG, climate, or stakeholder capitalism, become vulnerable to capture unless leaders recognise the influence dynamics inside their own organisations. Power tends to bend change to preserve its core advantages, even if on the outside, there is a social veneer of reform.

Three Lessons For Leaders

Transparency isn’t enough. Capture thrives not only in secrecy but also in complexity. Rules and disclosures can be co-opted to serve narrow interests, whether the pressure comes from lobbyists outside or advisers inside.

Power must be mapped, inside and out. One should ask: Who benefits? Who decides? Who pays? Recognising the subtle pull from advisers and internal stakeholders is just as important as spotting external lobbying, if we are to understand how influence networks operate. Both directions matter.

Influence can be democratised. Capture isn’t inevitable. Whistleblowers, civil society, investigative media, activist investors, and reformers inside organisations can rebalance the game if they know where influence is being applied. Spotting both internal and external pressures is key to shaping change that lasts.

Resisting Capture: What Can Be Done

Societies know capture is a problem, and efforts to push back are not uncommon. In the US, “drain the swamp” has become a rallying cry against lobbyists and special interests in recent election cycles; yet, lobbying expenditures in Washington still run into billions each year. In the UK, scandals such as Greensill Capital’s access to government ministers reveal how the revolving door appears to remain wide open, and at the very least, there is a good case to strengthen lobbying rules. In the EU, corporate lobbying in Brussels has led to stricter disclosure requirements in recent times, but advocacy groups continue to highlight loopholes and weak enforcement. Just this summer, it was reported that several high-profile companies were revealed to have misreported their lobbying expenditures in Brussels, where as many as 25,000 lobbyists are believed to operate. These examples show that while there are rules regarding policy capture, strategies also adapt as fast as the rules designed to contain it.

Leaders can create a fairer playing field by acting on both fronts. Policymakers can strengthen institutions further, build better anti-corruption safeguards, and support public-interest lobbying and better transparency. Observing influence networks regularly will help spot risks early, rather than reading about them in the press. But the key to all of this is getting the balance right between influence that informs versus influence that captures.

Business leaders can take a similar approach: understanding how capture could reshape their sector, auditing influence footprints like any other risk within their business, and avoiding engaging in strategies such as performative ESG or greenwashing, which just erodes trust. Taken together, these steps don’t just resist capture; they can help steer change that really lasts and promotes trust.

Final Thoughts

The shape of influence is the shape of change. Every debate about change needs three questions: change for whom, by whom, and in whose interest?

Policy capture isn’t just a democratic problem; it also poses risks to business performance and economic resilience, erodes trust, and slows innovation. Influence can flow from outside lobbyists and powerful corporations, or inward, from advisers and staff shaping decisions behind the scenes. The costs are widely spread, while the benefits are narrowly concentrated, giving the majority a strong incentive to push back.

Leaders who recognise and resist both internal and external capture aren’t just protecting their institutions and businesses; they’re shaping change that lasts. And lasting change brings stability, trust, societal good, and, ultimately, a healthier market and bottom line for business.

Most of us are taught to think in averages. Average cost. Average returns. Average customers. Average outcomes. We’re told that being above average is “good enough.” And when we think about things such as economic development, business, or progress, we often frame it through that same lens.

But averages can be misleading. Imagine an aid worker in a food-insecure region telling a child, “On average, children here are not hungry.” That average hides the very real suffering of individuals.

The problem is that in politics, economics, and business, many of the most important dynamics don’t follow neat averages. They follow power laws.

And if you’re involved in economic development, leading a company, or navigating a complex career path, understanding this pattern can transform how you perceive risk, success, and influence. It’s the first step toward becoming more effective.

What Exactly Is a Power Law?

In statistics, the shape of how outcomes are spread is called a distribution. Some shapes (like the bell curve) suggest most people cluster around the average, while others, like a power law, suggest a few dominate and most will barely register.

A power law distribution describes those situations where a small number of things account for a very large share of the results. It underlies the famous 80/20 rule, where 20% of inputs drive 80% of outcomes.

But power laws run deeper than productivity insights: they explain why a handful of companies dominate markets, why in geopolitics a few nations can reshape the international system, and why a single decision can alter the trajectory of an entire career.

Formally, the probability of an event scales with its size raised to a power of a negative exponent. To put that in plain English: big outcomes are rare, but not as rare as a simple average would suggest. That’s why blockbuster movies, billionaires, or viral posts on social media appear more often than intuition based on averages would predict. It also explains why the same few business books appear on the airport bookshelves, no matter where you are in the world, a power law of publishing in action.

Where Did the Power Law Come From?

The idea goes back to Vilfredo Pareto, the Italian economist and sociologist, who in 1896 noticed that 80% of Italy’s land was owned by 20% of the population. This observation became known as the Pareto Principle.

Mathematicians and statisticians subsequently formalised this into power law distributions. Unlike the bell curve (normal distribution), where things cluster around the middle, power laws describe systems where the “tails”, the extremes of the distribution, dominate.

Power laws appear across disciplines:

• Physics and statistics: Benoît Mandelbrot (the father of fractal geometry) used power laws to explain complex patterns in finance and nature.

• Computer science: They describe the size of networks (why a few websites get most of the clicks).

• Economics and business: They reveal why most startups fail, but a few flourish and become unicorns.

Why Power Laws Matter

Once you know how to look, it will become more apparent that power laws are everywhere:

• Business: A handful of products or people generate most of the profits. This means we should focus our energy on these vital few.

• Markets: Just a few firms dominate the major indices. Understanding their scale and network effects is key.

• Politics: A small number of regions, donors, or voter blocks can swing outcomes. We should find the leverage points.

• Media: A few voices or stories capture most of the attention. So we should build our presence where it counts.

• Wealth: A tiny group holds outsized capital. We should expect feedback loops that reinforce inequality.

Example: The Hollywood Film Industry

Hundreds of thousands of actors exist; everybody believes they are going to make it big if they move to Hollywood, but only a tiny handful consistently land blockbuster roles. The most famous directors attract disproportionate funding and attention. Producers with the right track records get to greenlight the biggest projects. But the rest are most often left to fight over the scraps in the long tail of B movies and direct-to-video.

Yes, it's not “fair,” there is lots of talent out there yet to be discovered. But it’s not random either. What's happening here is the power law in action. Power laws emerge from feedback loops: success attracts more success, attention begets attention, and wealth creates more wealth. Systems tend to reinforce themselves. It’s not that some are predestined to make it. Rather, small and sometimes random breaks get amplified through reinforcing loops, so the system magnifies differences over time.

What It Means for Your Career

Careers are not distributed like school grades; they rarely follow a neat bell curve.

• In a bell curve world, steady effort ensures steady returns.

• In a power law world, positioning, leverage, and visibility tend to matter more than raw effort.

• Opportunities, recognition, and resources tend to compound: success attracts further success, and small advantages can scale into outsized rewards.

While some industries (e.g., civil service, mid-level corporate roles) may have more bell-curve-like distributions, a lot of the time this is not the case. In many fields, a handful of projects, relationships, or opportunities can drive the majority of career growth.

That means it makes sense to:

• Focus where the leverage is—don’t spread effort evenly.

• Build a unique edge to avoid being interchangeable.

• Recognise tipping points: moments when one opportunity can shift us into the head of the curve.

Being better than the average colleague may mean you keep your job, but the few who learn to play at the head of the curve capture the majority of rewards.

Change Under the Power Law: Rare but Radical

Change in power law systems does not happen gradually. It comes in spikes. Most meetings, projects, or hires may matter little. But a single high-leverage hire, breakout product, or bold strategic move can redefine the game. This is the realm Nassim Taleb calls the Black Swan—rare, unpredictable events that carry massive impact. Recognising that most change comes from these outliers is essential for navigating uncertainty.

Politics tends to work the same way: there are long periods of calm, punctuated by revolutions, reforms, or shocks. As Lenin (often cited) observed:

“There are decades where nothing happens; and there are weeks where decades happen.”

That is not to say that what we do every day is not important; rather, the insight is knowing that most activity is noise, but a few moments can be significant.

Insight for Leaders

In a power law world, effective leadership requires:

1. Prioritise leverage – allocate energy where outsized returns are likely.

2. Watch the long tail – outliers often matter more than averages.

3. Guard against fragility – reliance on a few dominant elements increases systemic risk.

4. Reframe failure – most bets won’t pay off; one success can offset many setbacks.

5. Design for tipping points – create conditions that allow success to compound until breakthroughs occur.

Power, Systems, and Distribution

Power laws intersect with political economy, inequality, and legitimacy. When wealth or influence gets too concentrated, backlash tends to follow. But redistribution and regulation aren’t just ethical; they are also mechanisms to keep systems from breaking. What the power law world gives, it can also take away.

Implications for leaders:

• Understand your position in larger systems.

• Anticipate political and public responses to concentration.

• Think systemically, not in silos.

Final Thought

The “average case” is comforting, but it is also misleading. In reality, most things don’t matter much, and a few things matter a lot. Intuitively, if we open a newspaper with this in mind, this makes a lot of sense.

By spotting the vital few, while ignoring the trivial many, and preparing for disproportionate change, leaders gain an edge.

In a world defined by outsized events and asymmetric returns, power belongs to those who understand the shape of the system and then act accordingly.

In most companies, we’re often led to believe that the org chart tells us everything we need to know, who reports to whom, who approves what, and who signs the cheques. But anyone who’s spent time inside a real business organisation knows that’s only part of the picture.

Big decisions don’t always follow formal structures. Strategies stall, initiatives quietly fade out, and people with no official title somehow manage to steer the ship. So what’s going on?

Well, the real world is a bit more nuanced: power isn’t just about structure. It’s also about strategy, perception, and silence.

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, especially when it comes to change, conflict, or transformation. And if we’re grappling with resistance or internal complexity, Lukes gives us a sharp lens for understanding how power actually operates.

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 the surface. Below that 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 the 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 and invisible above and below the surface.

Visible Power (overt power)

• Who prevails in a formal decision or vote?

• For example, a budget signed off, a key leader appointed, or the approval of a new strategy.

Agenda Power (the mobilisation of bias)

• Who decides what even makes it onto the table?

• For example, you may have a transformative proposal, but if you can’t get it on the agenda, it's not going to happen.

Ideological Power (deep cultural assumptions or unspoken norms)

• Who shapes what people believe is possible, normal, or acceptable?

• For example, cultures that make dissent feel disloyal, or status quo assumptions that never get questioned. In the corporate world, this can include internal branding, mythologies about “what makes us successful,” or unspoken taboos that shut down dissent.

This model shows that power isn’t just about outcomes; it’s also about the battles that never get fought.

Why This Matters for Business

This might sound theoretical, but 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:

• Visible power sits with formal leadership: executives, budget holders, and boards. Clear, necessary, and trackable, but often reactive.

• Agenda power lives with gatekeepers: chiefs of staff, respected insiders, project leads. These are the people who shape what gets attention.

• Ideological power is embedded in culture, language, and mythologies. It’s why some companies can’t pivot, even when the writing’s on the wall.

Take a stalled transformation effort. On paper, everyone’s aligned. But behind the scenes? Middle managers keep “raising concerns,” or there’s quiet discomfort with the direction of change. That’s agenda and ideological power doing their work.

In moments of disruption or internal conflict, this model helps unscramble why plans fall apart: because formal authority alone wasn’t enough to overcome the other two dimensions of power.

How Some Teams Are Adapting the Model

Here’s how some forward-looking organisations are beginning to apply Lukes’ model explicitly:

• Stakeholder mapping tools help leaders track both formal and informal influence, who people listen to, trust, and follow.

• Agenda-setting rituals such as reverse town halls or open-priority weeks create space for ideas to surface from outside the usual centres of control.

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

These are practical ways to rebalance influence. And they reflect a growing awareness that managing power means managing systems.

Power is Not Just Positional

Yes, titles still matter. But they’re only one piece of the power puzzle.

If we want to drive real change, we must read between the lines: watch for what’s not being said, notice who’s shaping the agenda, and challenge the assumptions holding the system in place.

Lukes’ model isn’t just political theory. It’s a toolkit for leading through complexity, navigating resistance, and unlocking transformation.

And the truth be told, that’s the world most of us are working in.

There’s a simple reason why even the smartest strategies can struggle or even fail. It is because people forget that change, any kind of change, is normally political.

Whether you’re trying to grow your business, shift direction, take on a leadership role, or roll out something new and important across your team, there is one truth that tends to show up time after time: success rarely hinges on the quality of your ideas alone. Great ideas are necessary but not sufficient. The truth is that success also hinges on how well you understand who holds power and how to go about working with them.

Now I am not making a Machiavellian argument here. Many offices already have a Machiavellian character who ends up doing more damage than good. Instead, I am approaching this topic of power in a more systems-aware way. In business as in politics, ethics matters for long-term success, and long-term success often depends on dealing with the world as you find it.

This is where stakeholder management becomes more than just another corporate buzzword to drop at some point during meetings. It becomes a strategic game-changer that allows you to see the power dynamics at play, which could make or break what you are ultimately seeking to achieve. It’s a skill everybody can learn, sharpen, and apply across any project, role, or career stage, making it a factor that works with them rather than against them.

Behind every great change, every bold pivot, and every business transformation that makes an impact, there’s usually a map. Not just of the marketplace but of the people involved.

Seeing What Others Don’t

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Volatility is the new normal. In today’s VUCA world, businesses face a dense network of interlinked risks, spanning energy shocks, regulatory changes, digital disruption, and shifting consumer dynamics. These risks don’t exist in isolation. Instead, they reflect the constant interaction of political decisions, economic forces, social shifts, and technological breakthroughs. Understanding this interplay is at the heart of political economy, where governance, markets, and power collide to shape business realities.

As discussed in a recent episode of the Forces and Signals podcast, oil remains the lifeblood of the global economy, powering logistics, manufacturing, aviation, and national security, while geopolitical instability in resource-rich regions can trigger price spikes that ripple through supply chains, reduce consumer spending, and drive inflation. From the Middle East to Africa and the Eurasian continent, these shifts reflect not just market forces but political power struggles and economic policies that shape global resource distribution.

At the same time, artificial intelligence is reshaping industries, not just automating tasks, but redefining competitive landscapes with new opportunities and emerging risks, including ethical dilemmas, data governance challenges, energy consumption, and algorithmic bias.

Regulation has likewise evolved from a compliance concern to a strategic variable in many markets, where ESG mandates, digital taxes, and data localisation laws can rapidly reprice markets or alter access. Sudden shifts in political priorities, especially in major economies like the US, the EU, or China, can change trade rules, tilt investment climates, and redraw global value chains.

Consumer behaviour, too, has become more volatile and harder to predict. Cultural movements, inflationary shocks, generational values, and viral trends, amplified by social media, drive demand in real time. From TikTok-driven product surges to Gen Z’s ESG preferences, businesses must now read social sentiment as closely as they track economic indicators.

The Need for Strategic Foresight

In this environment of compounding disruptions, business leaders and investors can sometimes feel pulled in all directions at once. If only there were a structured, strategic tool designed not only to survive until the next quarter but to adapt and thrive with foresight amid uncertainty.

Scenario planning is such a tool that offers that critical edge. Applying it with systems thinking principles helps organisations to dynamically visualise how multiple political, economic, technological, and social factors interact, amplify, or counterbalance each other, moving beyond more traditional linear forecasts.

This holistic approach aims to explore multiple plausible futures and their plausible impacts on business. It can help business decision-makers map out uncertainties, stress-test their assumptions, and build real resilience to become truly future-ready in our age of disruptions.

From Cold War Origins to Modern Corporate Strategy

Scenario planning’s roots lie in the core challenge of anticipating complex, interdependent global shifts.

Originating in Cold War military strategy, agencies such as the U.S. Department of Defense and the RAND Corporation developed scenarios to explore nuclear conflict outcomes and Soviet tactics, embracing multiple plausible futures rather than singular predictions.

Governments have also applied scenario planning to understand volatile geopolitical developments and policy shifts, such as dealing with power, governance, and economic uncertainty.

The corporate breakthrough for this approach came in the late 1960s and early 1970s, when Shell, the Anglo-Dutch oil major, recognised that traditional forecasting failed to capture global energy market uncertainties shaped by political and economic forces. By developing multiple energy scenarios, the company anticipated the 1973 oil crisis ahead of competitors, gaining a strategic advantage and setting scenario planning as a best practice for managing political economy risks in business.

How Scenario Planning Works in Practice

Scenario planning doesn’t predict the future; rather, its participants postulate or explore multiple plausible futures. A scenario is a plausible representation of how the future might unfold based on a combination of current trends, uncertainties, and potential social, political, economic, or technological shifts, typically over a time horizon of five to ten years.

You don’t have to be an avid science fiction reader to be good at strategic foresight. If you follow the process, anyone can learn to anticipate and prepare for a range of plausible futures.

This exercise prepares businesses for multiple plausible futures, capturing the complex interplay of political, economic, technological, and social drivers. It is a key step that sits before strategy and implementation.

This kind of strategic foresight helps move beyond linear forecasting and grapple with different layers of uncertainty. As former U.S. Secretary of Defense Donald Rumsfeld famously noted, decisions are shaped by “known knowns” (things we’re aware of and understand), “known unknowns” (factors we know will be important but whose outcomes are uncertain), and “unknown unknowns” (emerging surprises we haven’t anticipated). Scenario planning is especially useful for the middle category—those known unknowns—by mapping out plausible futures shaped by today’s uncertainties. But it also cultivates the mindset and agility needed to better detect and respond to unknown unknowns as they emerge.

There are several ways to approach scenario planning. Sometimes, combining methods provides greater nuance and depth. But here is a typical example of the steps involved in putting it to work in a structured way:

1. Define the Core Question.
   This first step is fundamental, where the core question to be answered is addressed by the key stakeholders involved in the process. To take the challenge of oil-based disruption as an example, that question could be “How could oil price volatility and regulatory shifts impact our business over the next five years?”

2. Identify Key Drivers.
   In this step, the key trends and driving forces of the core question are considered. Factors include geopolitical risk, technology adoption, climate policy, consumer trends, and governance changes. At this stage, there are several similar analytical tools, such as the STEEP model and the PESTLE model, that are helpful.

3. Pinpoint Critical Uncertainties.
   At this point, you will want to consider which drivers are impactful yet unpredictable for your operations. For example, the pace of green energy adoption or shifts in international trade policy.

4. Build a 2x2 Scenario Matrix.
   In this step, you will want to define the key scenarios visually using a Scenario Matrix.

   Cross two critical uncertainties on an xy diagram to generate four distinct futures.

   Here is an example of what such a matrix could look like:

   

5. Develop Narrative Stories.
   You are now at a point where you can detail each scenario’s market, political, and consumer impacts.

   For example, the above matrix plots scenarios based on oil price on the y-axis and the pace of the green energy transition on the x-axis.

   In the top-left scenario, oil prices are volatile, and the energy transition is slow. Here, businesses face carbon-linked supply chain stress, with input costs and logistics still vulnerable to oil price shocks and fossil fuel dependencies that a faster energy shift might have helped to mitigate. A faster energy transition would also appeal to climate-conscious customers.

   Meanwhile, in the bottom-right scenario, the energy transition is fast, but oil prices are stable. Cheap oil means there is a business case for fossil fuel systems to persist, and businesses may struggle to find agreement to fully let go of legacy models. The result could be a dual-track strategy: adopting clean technologies while remaining tethered to high-carbon assets. This may make short-term financial sense and please a lot of stakeholders, but still, the business is exposed to potential future disruption if oil prices spike again, or if policy, investor pressure, or regulation accelerates divestment at an inappropriate time for the business.

   The other two scenarios paint a picture of business as usual and a volatile shift towards green energy.

6. Assess Business Implications.
   At this point, you will want to assess what business impact the different scenarios will have on costs, supply chains, revenues, and risks.

7. Formulate Strategic Options.
   You are now at the point where you can design flexible strategies to succeed across scenarios. These could include activities such as diversifying suppliers or investing in particular types of energy efficiency.

8. Monitor and Update.
   Finally, it is important to note that this is an ongoing exercise. So, it is important to track indicators such as oil prices, policy changes, and technological breakthroughs, revisiting and updating these scenarios as needed. Over time, performing daily acts of foresight will become second nature as you become even more attuned to what is potentially important and impactful for your business.

Why Scenario Planning Matters for Decision-Makers

Scenario planning helps business leaders and investors:

• Reduce strategic blind spots

• Uncover hidden risks and emerging opportunities

• Stress-test key assumptions

• Enhance cross-functional collaboration

• Build a strategy that’s resilient under uncertainty

Today, Scenario Planning is used in designing energy transition pathways, managing climate risk in supply chains, forecasting AI-driven regulatory shifts, and navigating geopolitical complexity in markets from semiconductors to critical minerals.

Governments also rely on it, embedding scenario logic in national industrial strategy, infrastructure planning, and security forecasting.

It works across functions: product design, innovation, marketing, and leadership development. When done well, it unlocks a future-ready mindset across the business.

Final Thoughts

No one can predict the future. But we can prepare for it.

Scenario planning helps decision-makers shift their mindset from chasing certainty to building resilience. It breaks linear thinking and unlocks space for creativity, strategic debate, and unconventional insight.

Strategic foresight → enables strategy → which drives effective action.

A business strategy without foresight is like a ship setting sail without a compass.
Scenario planning without a business strategy is like having a compass but no map. Together, they help organisations chart a navigable course, grounded in insight, open to adaptation, and ready for disruption. Scenario planning helps drive a future-ready business strategy.

Business and policy leaders 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.

Today, an event on one side of the world can ripple throughout the rest of the world in real time. The COVID-19 pandemic made this visible to all, impacting not just public health and security but also economies, supply chains, and local business operations. The whole world has become deeply interconnected. Inevitably, this has led to even the most local of businesses being exposed to global events.

Leaders in politics and business increasingly sense that they are leading their teams through chaos, where a new crisis could break out at any moment, requiring them to revise their plans and push in a new direction. The biggest driver in this new norm is a shifting context.

In the late 1980s, as the old geopolitical order dissolved, the U.S. military recognised that traditional planning models no longer fit their purpose and thus developed a new situational diagnostic lens to better understand the changing international context and the challenges it posed.

They called this new reality:

VUCA—Volatility, Uncertainty, Complexity, and Ambiguity

It captures the defining features of today’s leadership environment, and it demands a new style that is deliberate, flexible, and responsive.

Now widely applied in business, government, and organisational strategy, VUCA helps decision-makers read the landscape before making important decisions. In our era, shaped by AI disruption, climate volatility, and shifting geopolitical power, it provides a shared language for complexity and change.

It functions as a sort of strategic weather report, a way to diagnose the environment before applying the sort of change tools that I have recently written about, such as Force Field Analysis, Kotter’s process, or managing people through the Kübler-Ross or Maslow frameworks.

Here’s the framework and some ideas that leaders can use to bring order to the chaos and lead with intention through each of its dimensions:

1. Volatility means rapid, unpredictable change. Markets tend to swing in different directions, trends flip overnight, and yesterday’s playbook no longer applies.

2. Uncertainty means you don’t have all the facts, or even if you do, they keep changing.

3. Complexity is about the multitude of interconnected variables. When decisions are made, they can have ripple effects. Even small changes in one area can create unexpected consequences in other areas.

4. Ambiguity is about unclear meaning, a fog that inhibits clear decision-making. Even with data, it’s still not obvious what’s happening or exactly what should be done about it.

To help leaders respond constructively, the futurist Bob Johansen proposed a VUCA Prime model. It flips the original acronym to the following:

VUCA—Vision, Understanding, Clarity, and Agility

This reframing encourages leaders to move from passive reaction to active transformation.

How to Lead with Intention in a VUCA Environment

So, given the above, how can leaders proactively lead through chaos across these dimensions? Well, here are some ideas to help leaders navigate this environment.

Volatility

The key here is to provide a clear vision, that is to say, be your team’s north star. In volatile times, people need direction more than certainty. Your role is to paint a compelling picture of where you’re going, even if the path changes later.

At the same time, it makes sense to adopt an agile methodology. Devote resources to preparedness. Create processes where feedback is rapidly gathered and assessed. Fast feedback loops help teams quickly understand what is working and what isn't. Develop an iterative process of experimentation where ideas are tested, results are analysed, and lessons are quickly learned.

During global supply chain shocks, some businesses adapted within weeks by shifting to local sourcing and alternative distribution hubs, while others were caught out by the sudden change and did not change fast enough.

Uncertainty

When you don’t have all the facts or they are constantly subject to change, you will want to build a shared understanding of what is happening. Knowledge is power, so to build that shared understanding, start by talking to customers, listening to frontline teams, and monitoring weak signals. After doing that, communicate openly: what you know, what you don’t, and how you're still learning. This approach builds psychological safety, trust, and alignment within your team even when clarity is hard to come by.

Risk management processes can help better prepare and mitigate uncertainty, so having access to insightful analytics, metrics, and the room for manoeuvre is important.

During the early days of the COVID-19 pandemic, political leaders who said “here’s what we’re seeing, here’s what we’re trying to do” built more credibility than those who over-promised, delayed, or offered non-credible proposals.

Complexity

Small changes in one area create unexpected consequences in others. When multiple factors and forces are at play, there is the risk of unintended consequences and chain reactions. So, it is important not to oversimplify; instead, it is much better to synthesise. That’s where systems thinking becomes essential: mapping relationships, feedback loops, and leverage points. The key is to clarify what's essential, enable cross-functional collaboration, and decentralise problem-solving. Empowering others within the business to make decisions can lead to more agile and contextually appropriate solutions.

Global firms navigating climate regulation, stakeholder activism, and tech disruption often succeed by creating cross-disciplinary “sensemaking hubs” to inform their strategy.

Ambiguity

Ambiguity blurs the landscape, even with the benefit of lots of data. The important task is to bring order to the disorder, which means taking an agile approach and creating space for solution exploration. Run pilot projects to gather insight before scaling decisions. Ambiguity is best tackled with curiosity and controlled risk.

Companies entering new markets often don’t rely on static forecasts; they have to get out into the field and test, iterate, and adapt their business model in real time to what is needed and wanted on the ground.

Final thoughts

Chaos doesn’t necessarily mean pending failure. It can also be the start of a beautiful new system, a new logic, or a new way of operating.

So, the question isn’t so much whether we face volatility, uncertainty, complexity, and ambiguity; a summary read of any quality newspaper or business magazine will confirm that we already do.

The real challenge is this: are we actively shaping the future, or just passively reacting to it?

Sometimes, workplace change can feel inevitable, yet somehow still stuck.

In your office, maybe you have been trying to embed more agile ways of working. Or perhaps you 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, change very little when they return to their desks.

Or perhaps it’s digital transformation—you’ve bought the new tools, but the adoption just isn’t resonating. If you’ve felt that invisible pushback from colleagues when rolling out something new, you’re not imagining it. You’re feeling the system pushing back on you.

Lewin’s Big Idea: Systems Are Held in Place by Competing Forces

That’s exactly what the psychologist Kurt Lewin tried to unscramble way back in the 1940s. Lewin was one of the earliest thinkers to treat group behaviour as something held in place by forces, with some driving change forward, and others trying to hold it back. The status quo is basically the equilibrium point of these opposing forces.

From these insights came what is now called Force Field Analysis—a widely used diagnostic method and decision-support tool that maps the dynamics behind why systems remain the same and how they can be shifted.

Lewin was an academic, but he wasn’t writing from his ivory tower for other academics. He sought to understand the cause of things and, drawing from physics, developed this tool for real-world change agents—business leaders, government reformers, and community organisers dealing with tough, messy problems such as workplace morale, racial integration, and leadership resistance. He wanted to help them see where the system was before attempting to shift it. That insight remains valid today, nearly 80 years later.

Here’s how Force Field Analysis works:

To perform this analysis, you first need clarity on the changes that are proposed. Then you need to work with team members and stakeholders to identify and prioritise the external and internal driving forces pushing for a change (for example, client demand for agility or staff desire for flexibility in their work). Then you need to do the same for all of the possible restraining forces that could hold change back (such as unclear expectations, manager discomfort, or fear of losing team cohesion).

The current situation, whatever it is, is held in place by the equilibrium between these opposing forces, but if the forces for change are stronger, it is more likely to happen. In other words, to bring about change, your mission is to strengthen the driving forces and weaken the restraining forces.

Let’s consider an example of how this could work in practice with a case we’re all familiar with: embedding agile and flexible work practices.

Imagine your business is trying to move toward hybrid work and faster, more responsive delivery models. On paper, you’ve got buy-in; it seems logical. Clients want it. Employees love the idea of flexibility. You have put the tools in place. Yet things stall. Managers hesitate. Accountability drops. The business culture erodes. What is happening here isn’t really about bad intentions—it’s a system resisting change.

So what can you do about it? This is where Lewin’s classic Three-Step Change Model helps translate diagnosis into action.

Lewin’s Three-Step Change Model: How to Make Change Stick

Here’s how it works.

Step one: Unfreeze. That means surfacing the current assumptions and pain points. By using Force Field Analysis, you should have arrived at a position where it has been possible to make the invisible visible. In this step, you will have written out what’s helping change and what’s blocking it. You’ll often find the biggest resistors to change are not technical; they’re human, structural, or psychological.

Step two: Change. Now that you see the tension points, it is time to design around them. Here, you should strengthen the drivers of change, such as sharing client demand for agility, celebrating flexible work wins, or showing how hybrid setups actually improve service delivery.

At the same time, you will be looking to reduce the resistance to change. This is where you could coach your managers, clarify expectations, and create new norms. The aim here isn’t to force change, but to rebalance the system, in a diplomatic way, so that change becomes easier and more natural than staying the same.

Step three: Refreeze. This is the part most teams are said to skip. But if you want new behaviours to stick, you have really got to stabilise them. So, it might mean embedding hybrid workflows into onboarding, measuring success through collaboration outcomes, or establishing regular team rituals—like reflection sessions (called retrospectives) and daily check-ins (standups)—that help reinforce the new way of working. Without these, people often slip back into old habits. Real change needs ongoing support and reinforcement.

But remember: Force Field Analysis is a static tool. It serves as a great starting point because it gives you a snapshot of where your system is right now, but all organisations evolve over time. The forces shift, particularly because the personnel of businesses change over time. That poses new questions. What happens if leadership support for change starts to wane? What if you change the training budget? What happens if early productivity dips? These are dynamic questions, and that’s where System Dynamics can enter the picture.

From Diagnosis to Simulation: System Dynamics

While Force Field Analysis is a great tool to help you diagnose, System Dynamics helps you to simulate (check out the Forces and Signals podcasts on Systems Thinking). It lets you map how different parts of your system interact over time. You have the ability to test different scenarios, such as phasing in hybrid policies or varying leadership involvement, before committing to real-world action. Think of it as a sort of pressure-testing of your change strategy in a sandbox before unleashing it in your real-world workplace.

The sweet spot is to combine both tools. You can use Force Field Analysis to identify the tensions. Then, you make use of System Dynamics to explore how those tensions could play out over time and thus, figure out what your best interventions might be.

So, What’s The Takeaway Here?

Change doesn’t happen just because we want it. Other people in the organisation often have counter ideas or, at the very least, prefer the status quo.

Change happens when we shift the forces in the system—by design, not by accident. So, whether you’re going digital, going hybrid, or going agile, lasting transformation requires that you unfreeze the current reality, act with intent, shake things up, and then reinforce what works.

So, if your workplace feels stuck in transition, take some time out to pause for reflection and map out the forces at play. Once you shake things up, that elusive breakthrough may finally emerge.💪

Moments of transformation in business or society often arrive cloaked in tension. It can be a time of heightened uncertainty; it can feel like navigating stormy weather. Expectations shift, structures realign, and long-held routines face disruption. Yet if we are to succeed amid all this flux, one element remains central to navigating complexity: communication. Without it, even the best strategies will crumble under confusion, resistance, or just inertia.

As change is essentially people-driven, communication becomes the vital force behind it. Without clear communication during such times, we risk being exposed to potentially more damage than we expected at the start of a change journey.

The Role of Communication in Change

Transformation, by nature, alters the status quo. If everything stayed the same, nothing would change. Yet the world around us is changing. In business, change is not just a strategic shift for staff, it’s a lived experience that impacts routines, identities, and well-being.

For leaders and managers, communication is the necessary bridge between vision and implementation, between strategy and behaviour. However, communication doesn’t merely mean the transmission of instructions, such as a public safety alert—it frames understanding, aligns incentives, mitigates fears, and creates the emotional and rational buy-in required to move forward.

Recently, I wrote about John Kotter’s 8-Step Change Model, which suggests that successful change depends on building urgency, creating coalitions, developing a vision, and embedding new behaviours into culture. Communication is integral to all eight steps, from igniting the initial urgency to anchoring the change in day-to-day operations.

Yet communication during change should not be just about talking more. It should also be about saying the right things in the right way to the right people at the right time—and listening deeply to feedback.

At its most basic, the well-known transmission model of communication, developed in the 1940s by Claude Shannon and Warren Weaver, helps us understand the mechanics of message delivery:

Sender → Message → Channel → Receiver

It reminds us that clarity, noise, and feedback all matter.

Messages are often disrupted by noise—whether that’s a literal buzz on a call or, more subtly, by fear-driven office gossip that distorts the intended message.

But during a journey of change, this one-way communication model can fall short. It often assumes a passive receiver and underplays the importance of sense-making—how people interpret messages based on values, emotions, context, and concerns for their future. That’s where two-way communication comes in.

In times of change, both modes are essential. The trick is knowing when to use each mode. One-way communication can deliver consistency at scale. Meanwhile, two-way communication helps foster understanding, mitigate resistance, and receive invaluable feedback.

Cognitive Biases: The Human Filters

Since change is usually people-driven, we need to be aware of how human behaviour shapes the way information is received. People don’t take in messages neutrally; we interpret them through mental shortcuts and filters known as cognitive biases, which can distort, resist, or reinforce what’s being said.

Psychologist and Nobel laureate Daniel Kahneman describes two modes of thinking that influence how we respond to change: System 1, which is fast, instinctive, and emotional; and System 2, which is slower, more deliberate, and rational. In moments of uncertainty or disruption, most people react first with System 1, emotionally, before System 2 has a chance to kick in. That’s why it's crucial for communicators to speak to emotions before pivoting to logic.

Consider the status quo bias, which makes us favour the current state of affairs, even when it no longer serves us. This bias explains why people often resist change instinctively. Leaders can counter it by presenting clear, compelling reasons why change is necessary, reinforcing what John Kotter calls the need to “create a sense of urgency.”

Then there’s confirmation bias, where we subconsciously seek out information that supports what we already believe. If new messages contradict our assumptions, we often dismiss them. That’s why effective change communication needs to gently challenge existing beliefs and introduce fresh perspectives, especially through trusted, credible voices.

The bandwagon effect, our tendency to follow the majority, can work in favour of change if managed well. This is where Malcolm Gladwell’s Tipping Point comes into play: once a critical mass of people begins to embrace the new way, momentum builds and adoption accelerates. Highlighting stories of early adopters and showcasing progress can help nudge hesitant individuals toward alignment.

Another powerful filter is the negativity bias, where people weigh losses more heavily than equivalent gains. In change settings, this often translates into a fear of what will be lost, even if the benefits are substantial. To overcome this, messages should reframe potential losses as opportunities and highlight tangible, relatable benefits, such as improved collaboration, meaningful incentives, or personal growth.

Other subtle but influential biases can shape how people respond to change. With anchoring, people place undue weight on the first piece of information they hear—so early messages in a transformation can disproportionately influence perceptions. First impressions matter. Availability bias also plays a role: people judge risks or outcomes based on what comes easily to mind. If a previous change initiative failed publicly, that memory may colour their outlook on future efforts, even if the context has shifted.

There’s also the issue of substitution, where instead of answering a hard question like “Is this change strategy effective?”, we unconsciously answer a simpler one like “Does this feel familiar or easy to grasp?”, without realising we’ve swapped the question. And representativeness bias can lead people to draw faulty conclusions based on similarity to past patterns, while ignoring relevant data or probabilities.

Finally, the way information is presented, framing effects, can dramatically influence decision-making. The same outcome can be seen as a gain or a loss depending on how it's framed. Saying “80% success rate” feels very different from saying “20% failure rate,” even though the numbers are identical. This means communicators must choose language carefully, framing change in terms that inspire hope and confidence rather than fear or doubt.

All of these examples remind us that people don’t absorb information as clean slates. We tend to make decisions based only on the information we have in front of us, without realising what we don’t know or what might be missing—what you see is all there is (WYSIATI), as Kahneman puts it. That’s why change leaders and communicators must design messages that anticipate human filters and work with them, not against them.

The Return to The Office Dilemma

Imagine a company board announces that it is ending hybrid work. From next quarter, all staff are expected back in the office full-time, because the board believes that this will improve productivity and ultimately increase bonus pools.

Employees are always supportive of increased bonus pools, but such a disruption to their daily routine is likely to see many react with frustration. Since home working was embedded during COVID, many have come to value the flexibility and the better work-life balance it provides. It is thus understandable that they will feel blindsided and not be happy about it.

So, how should leadership communicate an important organisational change such as this?

Here is a possible 8-Step-by-Step Communication Strategy aligned to Kotter's Model

1. Create Urgency: At this initial stage, that could mean sharing verified data showing remote work challenges, such as missed innovation, reduced rapport amongst colleagues, and weakening culture.

2. Build a Coalition: To build a change coalition that could involve talking and listening to the concerns of respected team leads early and co-creating possible solutions, such as a phased return to the office, to give colleagues enough time to adjust their daily routines and commitments.

3. Develop a Vision: At this point, clearly articulating the benefits of in-office collaboration for staff, rather than just the expected productivity gains for the business, could accelerate buy-in. Increased bonuses are good, but for many, work-life balance carries just as much weight, if not more.

4. Communicate the Vision: At the early stage, when one-way communication is appropriate to sell the vision to staff, the AIDA (Attention, Interest, Desire, Action) marketing model can be a useful tool in support of behavioural change.

   Here’s how it could be applied:

   • Attention: Communicate a compelling story or data point in support of the change, such as a key industry insight that is not widely known.

   • Interest: Share how the change ties to the purpose and shared success of the staff.

   • Desire: Outline employee benefits (career development, team energy, higher bonuses). The emphasis here is on what can be gained as opposed to what is being taken away.

   • Action: Communicate clearly in an appropriate forum on the next steps and the feedback channels available.

5. Empower Action: Listen to feedback and let teams design their return approach within the necessary guidelines.

6. Generate Short-Term Wins: Celebrate quick successes as a group, such as team projects that are now thriving in the office.

7. Sustain Acceleration: Reinforce culture-building wins with continuous communication across the business using different communication channels that best support the message.

8. Anchor in Culture: Communication is necessary for rapport and engagement. Build rituals and spaces that make office work desirable as a place to interact with each other. Ideally, staff should be motivated to come to the office so that they can catch up in person with their colleagues on a human and professional level.

While leadership sets the direction of change, staff also play a vital role in shaping how change unfolds. Employees can engage proactively by seeking clarity, offering constructive feedback, supporting colleagues through uncertainty, and participating in co-creating new ways of working. Active involvement will not only help adapt more effectively, but it will also ensure that the change envisioned also reflects the realities and needs of those it is going to affect most.

Crucially, this plan must integrate managerial and leadership communication, so it is important to think through the appropriate communication channels.

While leaders frame why, managers enable the how. Misalignment here creates confusion and disengagement. I have seen the confusion that is created when these two get mixed up – managers creating their own unique vision and leaders getting bogged down with the small details. So, during transformation, this distinction becomes vital.

A Systems Lens: Communication as a Feedback Loop

From a systems perspective, communication isn’t linear. It’s a feedback loop. Poor communication creates reinforcing loops of rumour, resistance, and retreat. Meanwhile, good communication builds positive cycles of learning, adjustment, and alignment.

To ensure communication remains effective throughout the change process, leaders can employ measurement tools such as surveys, pulse checks, and ongoing feedback loops. These provide valuable data on how messages are received and understood, so that timely adjustments can be made to keep the intended transformation on track.

For example, if early employee feedback on office return logistics is ignored, discontent and staff retention rates will spiral. But if it’s heard and addressed, it builds trust and reduces pushback. It can also save the business a lot of time and money in new recruitment drives.

Companies, just like societies, are complex adaptive systems, and sense-making must be distributed. A decentralised approach to understanding and responding to changes and challenges is what works best. Good communication makes the invisible visible, it lets the system “see itself,” and thus it can then adapt and evolve.

Change Successfully Communicated is Change Made Possible

Good communication alone doesn’t guarantee success, but without it, the likelihood of failure rises dramatically.

So, whether we are changing work models, reimagining strategy, or transforming policy, communication must be more than transmission—it must be engagement, dialogue, and a system of meaning-making.

Leaders who get this and truly understand the minds they’re speaking to, the biases they must gently overcome, and the structures through which people connect can successfully turn initial resistance into participation and then change into transformation.

In the end, communication is not an optional soft skill that we can afford to play lip service to. It’s the core skill that makes all change possible.

Regular readers of this newsletter know that change isn’t new, but its pace and scale are redefining how industries compete, markets function, and organisations operate.

Trade tariffs, financial crises, breakthrough technologies, regulatory shifts, pandemics, and fierce industrial competition can upend even the most well-run businesses.

In such an environment, transformation is often a necessity, not a choice. However, transformation doesn’t happen overnight, nor does it occur through leadership willpower alone. It is a process—one that requires building a new system of people, practices, and mindsets. And that process takes a coalition of people—change agents—who champion, coordinate, and sustain change efforts at every level of an organisation.

Change agents are essential to successful transformation, but enthusiasm alone isn’t enough. To succeed, they need a clear roadmap, tools to manage risk, and visible support from leadership above to embed lasting results.

Reinventing an organisation is no small task. It’s a collective effort, and the bigger the organisation, the harder 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 practical framework to help identify and empower those kinds of change agents within an organisation, so that when change is needed, it doesn’t stall, backfire, or fade, but takes root and delivers what is intended.

Kotter’s 8-Step Process: A Roadmap for Change Agents

So, how can leaders develop a clear roadmap to lead and accelerate intentional transformation?

One of the most effective and enduring frameworks comes from Harvard academic John Kotter, whose research into why transformation efforts fail led to the development of his 8-Step Process.

Kotter’s model offers a practical guide to successfully leading change from within. It not only outlines the key stages of transformation needed, but it also emphasises the critical role of people—a coalition of change agents who proactively guide, support, and sustain change at every level. He has subsequently recontextualised his model from a linear process into a set of agile “accelerators” that can be applied flexibly and in parallel with traditional hierarchical business settings.

Let’s take a closer look.

Why Change Agents Matter: Walking Through Kotter’s 8-Step Model

1: Create a Sense of Urgency

To seize a big opportunity to transform, change agents at all levels work together to spot and communicate the strategic threats or opportunities the business faces. They rally as many people as possible to act with urgency before complacency takes hold.

Kotter stresses the importance of urgency as the critical first step because without it, transformation efforts tend to stall. There are many examples in business of organisations that have not acted with a sense of urgency when they should have. For example, Blockbuster’s failure to respond early to Netflix’s disruption of its industry illustrates the cost of missing this sense of urgency.

2: Build a Guiding Coalition

Successful change is not an event; it is a social process. Change agents from across the business, particularly those with positional power, form diverse, committed coalitions that act with urgency and align leadership and operational teams, bridging silos and departments towards a common goal. IBM’s turnaround under Lou Gerstner in the 1990s was driven by such coalitions that unified the company.

3: Form a Strategic Vision and Initiatives

Change agents translate abstract strategy into a clear, relatable vision, a picture of the future, that people can really rally behind. They explain not just the “what” but the “why.” The ultimate vision may not come exclusively from the top; all levels have a role to play.

Sometimes, successful transformative leaders focus on talking more about delivery rather than “vision talk,” but what matters is that there is a clear vision of the future embedded, and the organisation clearly knows why they are engaging in the transformation underway.

4: Enlist a Volunteer Army

Broad engagement is vital. Change agents mobilise grassroots support through good communication about the vision of change and strategic initiatives in a way that many more across the business buy into it and want to play their part in making it happen with a sense of shared ownership.

5: Enable Action by Removing Barriers

Resistance to change, whether cultural, structural, or resource-based, is inevitable. Change agents using good feedback from all silos and levels identify obstacles and work to eliminate them. With the removal of roadblocks, a wider range of employees will see and believe how they can make a real difference.

6: Generate Short-Term Wins

Visible wins energise people across the business, minimise negativity, and build credibility for the change envisioned. Celebrating milestones sustains momentum and goes a long way towards turning sceptics into supporters.

7: Sustain Acceleration

Change is a marathon, not a sprint. It is human nature to take the foot off the pedal after celebrating some early wins. But a few battle wins should not mean the war is won. Change agents must stay focused to ensure that the strategic transformation goal is not prematurely celebrated and stay driven to avoid backsliding once early wins are achieved.

8: Institute Change

Finally, agents embed new behaviours and mindsets into the business culture, ensuring changes stick long-term so that they are eventually a real part of the organisation’s DNA. As Kotter argues, “change sticks when it becomes ‘the way we do things around here.’”

The strength of Kotter’s model lies in its focus on people—a coalition of change agents—who actively drive each stage. Each step depends on the different individuals throughout the organisation who champion change, from senior leaders to informal opinion leaders on the front lines.

What Happens Without Change Agents?

When change agents are absent, transformation efforts tend to fall into familiar traps. Initiatives lose momentum or stall before delivering real results. Resistance, if left unchecked, breeds scepticism that just slows progress even further. Without a unifying force to align people and action across the business, change efforts will remain fragmented across silos, and strategic intent will remain disconnected from practical execution. Meanwhile, old habits will likely persist, culture will stagnate, and innovation will be stifled.

A well-known example is Kodak’s decline, where the absence of internal champions to push digital transformation in the early days of digital photography contributed to what, in hindsight, were costly missed opportunities.

Practical Steps for Building Change Agents

Kotter’s framework is an ideal starting point when it comes to driving organisational change. One of the best ways to build a strong network of change agents is to identify informal opinion leaders within the business—colleagues whom others naturally trust and follow. These individuals often wield more influence than their job titles might suggest.

From there, investing in the development of change leadership skills across the organisation makes a lot of sense, enabling both managers and staff to lead from wherever they stand. Bringing teams together across departments encourages breaking down silos and building momentum through collaboration.

Additionally, maintaining transparency is crucial. Open communication helps build trust, spot challenges early, and rally support. And don’t forget to recognise those who are on board and driving the change effort. A little appreciation goes a long way in motivating colleagues, embedding new behaviours, and keeping the vision of a better future alive.

Change Needs Its Agents More Than Ever

In an age of accelerating disruption, organisations that cultivate and empower change agents clearly hold a decisive advantage. These individuals and teams are the people who turn abstract plans into action, mobilise collective effort, and embed transformation into culture. That is powerful.

Kotter’s 8-Step Process offers a clear, people-centred blueprint for successful change. Leaders and managers must recognise that without change agents, transformation remains an unrealised ambition.

Change needs its agents, not just to lead change but to embody the business’s ability to adapt and thrive in this age of accelerations.

Bonus Reading:

• Kotter, J. P. (1996). Leading Change. Harvard Business Review Press.

• Kotter, J. P. (2014). Accelerate: Building Strategic Agility for a Faster-Moving World. Harvard Business Review Press.

A few weeks back, I wrote a piece on strategy and why understanding the external environment is an essential early step in developing a business strategy.

Drawing on the classic business tool of PESTLE analysis, I used the fictional Unscrambled Beans Café, an independent specialty coffee shop based in a large international city with growth plans, to illustrate in this article how business founders can begin to anticipate and adapt to external changes.

Here’s that article:

I argued that, by using tools like PESTLE, businesses can gain early clarity on political, economic, social, technological, legal, and environmental shifts that affect their future, helping them craft a strategy that prevents strategic drift and positions them to thrive in a changing environment.

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

That’s where Porter’s Five Forces comes in.

Porter’s Five Forces - Understanding Competitive Pressure

Developed by Michael Porter, a Harvard Business School professor and a leading figure in modern strategy, this strategic framework, rooted in economics, helps businesses analyse the structure of their industry and understand the intensity of competition, the power of suppliers and customers, and the threats posed by new entrants and substitutes. It gets to the heart of one of strategy’s most important questions: what drives profitability in their industry?

When businesses truly understand these forces, they’re not only better equipped to compete, they can also begin to shape the industry in ways that work to their advantage.

Let’s take a closer look at the five forces Porter identified, with each one shaping the strategic landscape a business must navigate:

• Industrial Rivalry Among Competitors: The types of things to consider here are the number and size of existing competitors, how their products differ, the intensity of their rivalry, and the potential for further growth within the industry.

• Threat of New Entrants: New arrivals into the industry increase the battle for market share, which increases price pressures and the level of investment in marketing, innovation, services, and other factors that support competitiveness. The significance of the threat really depends on how high the barriers are to entering this industry. The more entrants, the less potential for higher profit.

• Threat of Substitutes: There are alternative products on the market that give the customer the same level of satisfaction or value but fulfill their needs by different means. There is a threat that customers may switch to these alternatives. Price and choice of alternatives are key.

• Bargaining Power of Suppliers: Within a business's supply chain, the power of suppliers to raise their prices or reduce their quality is a threat to profitability. Their power is a function of how many competitive suppliers there are to choose from in the supply chain. In general terms, the more choices of suppliers, the less power each has.

• Bargaining Power of Buyers: What should be assessed here is the degree to which customers can pressure the business to lower its prices or deliver a better product or service for the same price or less, particularly if alternatives are plentiful and switching costs are low.

Industry Competitors — The Case of The Unscrambled Beans Café

Using Porter’s Five Forces helps reveal just how tough and high-pressure the coffee industry can be for the Unscrambled Beans founders.

Here are some of the key dynamics at play:

• The business depends on coffee beans, in this case, ethical ones. But ethical bean suppliers were few and highly selective, and world coffee prices were rising due to climate pressures. That is a difficult challenge for an independent café.

• The barriers to entry were low. That means that with enough capital and a good location, almost anyone could start a café.

• As a result, the city’s coffee scene was increasingly saturated. Independent cafés, global brands, and digital-native startups were all competing for the same footfall.

• With so many options and reduced spending power, customers were price-sensitive and willing to experiment. Loyalty was hard to earn — people could just as easily switch to teas, smoothies, or energy drinks depending on the weather, or brew premium coffee at home.

In short, change and transformation were everywhere. From shifting customer preferences to intensifying competitive pressures, the landscape was evolving fast. If the founders want to scale into a successful chain, they need a clear strategy to deal with the environment they are in, one that helps them stand out, adapt continuously, and stay ahead of the curve. This framework helps with that.

What Strategy Can Enable The Unscrambled Beans Café(s) To Do Next

Armed with these insights, the founders are now better equipped to begin building a more complete strategy that better places them to succeed amongst such tough competition. There is a lot of value in difference, and everybody has a fair shot at succeeding profitably if they get their strategy right.

A year from now, the Unscrambled Beans Café could be in a very different place. By taking a more strategic approach, the business could, for example, reposition itself as a healthy, local, ethical coffee brand, leaning into wellness, good value, and low waste, which has partnered with regional bean suppliers to reduce reliance on volatile international imports.

Moreover, as part of their strategy, they could also develop their own digital loyalty app and capability to offer mobile pre-ordering. If they follow local politics more closely and make better use of available data insights from planning authorities, they could also better choose future shop openings by avoiding over-saturated or restricted zones, thus realising their goal of a city-wide café chain. With the business stabilised, they could also begin to develop new products with perhaps a rotating menu of seasonal drinks, capturing customer curiosity and brand loyalty so that customers don’t want to go anywhere else.

The likely result is a resumption in growth and an improvement in profit margins. And most importantly, with a stronger strategy, smart business decisions become much clearer to make, because there is a strategic logic guiding the business. Most importantly, they would now be in a position to better control the impact of external change rather than reacting to it.

The Unscrambled Beans story teaches us that strategy isn’t optional; in reality, it’s foundational for any profitable business.

Tools like PESTLE and Porter’s Five Forces don’t give us all the answers, but they do help us initially ask the right questions. And in a world where the coffee never stops brewing and the competition never sleeps, asking the right questions is half the battle.

All of us in business need a strategy to survive change and to use that change to our advantage. And the world needs great coffee shops, because that is where great articles are often written. 🍵😁

As I’ve discussed in some recent articles, the return of geopolitics has an impact on business. In many respects, business and geopolitics are becoming inseparable. From global supply chain shocks to sanctions, climate diplomacy to AI regulation, businesses are increasingly navigating not just markets, but the worldviews that shape them.

There are many worldviews out there. Some are grounded in international relations theory, while others are more narrative-driven, shaped by political messaging or ideology. Among those rooted in theory, two dominate how governments, and by extension markets, behave on the global stage: Realism and Liberalism.

You may not know them by name. You may even use a different vocabulary to describe them. But no doubt you’ve felt their effects through trade agreements, foreign policy decisions, regulatory shifts, global crises, or travel restrictions. Whether you’re exporting abroad, leading a business strategy, investing capital, or rethinking your career direction, understanding these two lenses is a competitive advantage.

So what are Realism and Liberalism in the global context? How do they help us understand how the world is shaped? And most importantly, which lens is most useful for business?

Let’s unscramble these two global visions and see what they mean for you.

Two Theories, Two Worlds

Theories matter most when they are useful. Think of them as grammar. International relations theory, or IR theory, is the grammar of international relations, an academic discipline that traces its roots to the aftermath of the First World War. Just like grammar structures language, theory structures how we understand global interactions.

Grammar doesn’t tell you what to say, but it does give you the rules to make sense of how things are said. Similarly, IR theory doesn’t predict events directly, but it does help us understand why states and other international players act the way they do. Without grammar, language is just noise. Without theory, world politics can feel chaotic. We might focus on the wrong signals or fall into magical thinking. Theory helps us spot patterns, rules, motives, limits, and opportunities that actually matter.

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