Are business leaders using the right models to think about the world around them?
Are we using 21st century models to think about 21st century challenges in our operating environment?
Shock and surprise at unexpected events is a common thread in human history, and business leaders have had more than their fair share of surprises recently. We all fall prey to “paradigm blindness” – constructing our interpretation of reality based on faulty assumptions, only to be surprised by the result. And that surprise has been especially acute among business leaders in the US and UK recently.
With so much ink spilled on the cognitive bias from living in bubbles, from listening too much to our tightest professional and social circles, we asked how business leaders could think beyond their existing paradigms.
This led us to ask two related questions:
1. Are business leaders listening? Are we listening to a full spectrum of voices across a firm’s global operating environment?
2. If business leaders listen deeply, and at a global scale, what could we learn? How would this impact the models we use to think about the world today?
To answer these questions, Brunswick listened.
Are we listening?
In fact, a majority of citizens in 22 of 26 countries survey agreed that “business leaders in my country DO NOT understand the challenges I face in my life.” This is especially acute in the United States, India, Finland, Mexico, South Africa, Spain, and Brazil, where over 65% believe that business leaders simply don’t understand their reality.
To make matters worse, citizens, customers and stakeholders consistently say that “leaders of large businesses in my country” put themselves first, investors and shareholders second, customers third and society last. Equally disturbing is the fact that employees are rated as second to last in CEO consideration, just above society.
But, we also learned that while the people of the world have deep skepticism of business leaders’ motives and interests, they do believe that (1) their country will benefit from business success and (2) that business CAN provide solutions to “the major challenges” facing their country. EVERY nation surveyed had net agreement with the idea that “when businesses in my country do well, the entire country benefits.” And agreement was strongest in China, the UAE, India and Indonesia. At least 50% of citizens in 19 nations or territories chose business as one of the top two institutions that is most effective at solving major challenges in their country. The people of the world may not fully trust business leaders. They may doubt business leaders’ motives. But, they know that these same business leaders are solution focused and can generate results.
In fact, a deeper analysis of this data finds that business is consistently rated as the institution that can both (a) represent people like me and (b) provide solutions. When viewed in these two dimensions, business outpaces government, non-profits, academic institutions, religious institutions and the military. Business outpaces these other institutions across the generations, across optimists and pessimists, and across residents of very large cities and smaller towns. In a world of low institutional trust, business is seen as most able to get things done.
At a deep level this finding helps to explain so much of our current moment - Donald Trump’s electoral success and support for Modi’s push to liberalize the Indian economy.
Business leaders can and must enter the ring. And, among business leaders, technology leaders have the greatest opportunity for leadership. Why? Because technology is the ONLY thing that people across the planet believe is getting BETTER, FASTER. We asked people across the world to rate technology, society, the economy and government on two dimensions – getting BETTER or WORSE? And changing FASTER or SLOWER? When plotted in two dimensions it becomes clear that people believe that technology is racing ahead in overdrive while virtually everything else is in reverse. This finding is true across most countries, it is true in developed and emerging markets and it is true for residents of mega-cites and smaller cities and towns. There is an elite belief that popular opinion is turning against tech and that there is widespread resistance to new technology. While both may be true in some quarters, technology is extremely popular with the general public.
On the basis of this data there is significant opportunity for technology company founders and CEOs to lead, to help their societies find solutions. This leadership may advance formally in the political realm, but tech leaders are and may continue to define leadership in their own ways. Our analysis suggests that they will have significant public support.
And where do people want business to lead? They want leadership on the basics, on education and training and on economic opportunity and equality.
Fresh Eyes: The 5G World
But, what do we learn when we dig deeper?
We first analyzed the data through the lens of the nation state, a common unit of analysis over the past several centuries.
But, then we went deeper and interrogated the data through the lens of the Five G World. The Five G World is our 21st century landscape, understanding 48 very different perspectives based on 5 dimensions:
1. Geography (developed vs emerging market)
2. Global City (large, mega-cities vs smaller cities and towns)
4. Graduation (educational attainment)
When we view the world through this prism we see:
1. Significant similarities between residents of mega-cities and significant differences between mega-cities and everyone else
2. Optimism among younger, mega-city residents and pessimism among older citizens in smaller towns
3. Wide differences of opinion on globalization, trade and the ability of government to deliver solutions
Stanley and Sofia
Consider two very different segments, “Stanley” and “Sofia.” “Stanley” is our segment of men 50 years and above, without a college degree, living in a small town in a developed market. Stanley is NOT happy. By a 23 point margin he thinks the future will be WORSE for his children. By a 37 point margin he thinks society is changing for the worse. He has a net negative view of both globalization and capitalism. Stanley’s voting patterns have made history in the West.
But let’s consider “Sofia.” The media doesn’t focus on Sofia very much. Sofia is the name for our segment of women 18-29, with a college degree, living in a large city in an emerging market. Sofia has a very different perspective. By a 48 point margin she believes life will be better for her children. She believes that the economy, society and the government are changing for the better. Sofia has a 64 point net positive view of globalization and a 27 point net positive view of capitalism. For Sofia, things are looking up.
Business leaders will need to engage with Stanley. But they will also need to engage with Sofia. In fact, better understanding each of the 48 segments of a Five G World will help business leaders better understand this moment in time.
Stanley and Sofia highlight a new core truth about the 21st century world. Residents of globally connected mega-cities tend to have more in common with each other than with their fellow citizens in smaller cities and towns. Take for example the issue of globalization. While mega-city residents across the world have a 50 point net support level for globalization, residents of smaller cities and towns across the world are only a net 21 points supportive.
If you live in a mega-city today, you are very likely to believe that your children will do better than you. In fact, mega-city residents are a net 35 points optimistic on this measure. But, if you don’t live in a mega-city, you are split. If you don’t live in a mega-city, you are only a net 2 points optimistic about the future of your children.
Jing and Megan
To illustrate this, let’s look at “Jing” and “Megan.” Jing is middle aged (30-49), male, college educated and lives in a large city in an emerging market. Megan is younger (18-29), has a college degree and lives in a smaller city or town in a developed market. Their future expectations could NOT be more DIFFERENT. By a net 51 points, Jing thinks life will be better for his children. By a net 13 points Megan thinks life will be worse for her children. Both Jing and Megan are core customers and employees for multinationals. Business leaders will need to listen to and engage with both of them. But, their expectations and worldviews are very different.
Nation State and City State: Christopher and John
These differences in perspectives extend far beyond traditional measures of optimism and pessimism, and they have significant geopolitical ramifications.
Take, for example, the question of who will lead in the future. We asked people across 26 nations and territories who they thought would be most influential in the world’s economy in 20 years. Do they think the answer is nation states, regional blocs of nation states (like the GCC), global groups of countries or major cities? The answers varied widely, even within groups, demonstrating that we are at an evolving and ambiguous moment.
To illustrate this point, let’s look at “Christophe” and “John.” Christophe is our college educated, Millennial in a large city in the developed world. John could be his father. John is a college educated Boomer in a small town in a developed market. Christophe’s top answer to this question is that “major cities” will be the economic drivers. John’s top answer is that global groups of countries, possibly global trading blocs, will be the economic driver. They may both be right. But, Christophe can envision a world in which mega-city mayors set the terms of trade and economic policy. While John can envision a world in which allies and trading partners set the terms. If John is right, then we will live in a world more like the 20th century. If Christophe is right, then we will live in a world very different from today, a world of added complexity for multinational businesses. Christophe’s world could happen. Mega-city mayors sit atop GDPs larger than many nation states.
Capitalism: Santiago and Penny
These diverging perspectives also apply to economic systems. Proving once again that language matters, while perceptions of “the free market” are very positive in both emerging and developed nations, perceptions of “capitalism” are decidedly mixed. For example, perceptions of capitalism in the developed markets are a net negative 3 points, but in the emerging markets they are a net 24 points positive. We find a similar pattern based on urbanicity with mega-cities a net 25 points positive toward capitalism and smaller cities and towns only a net 2 points positive.
“Santiago” and “Penny” are strong examples of this trend. Santiago is a young Millennial in a large city in an emerging market. Penny is a Boomer, living in a smaller city or town in a developed market. Neither hold a college degree. Santiago has a very positive perception of capitalism (53% positive vs 14% negative), but Penny holds a very negative view (39% negative vs only 14% positive.) On this and so many other issues they are worlds away. And yet multi-national business leaders will need to listen to and engage with both, as consumer, employees and community stakeholders.
Our analysis of the Five G World led us to question many current assumptions about the world today.
The first questionable assumption is the popular belief that we are in an Age of Rage, of pessimism and of gloom and doom. The Guardian famously summarized this view with a December 8, 2016 headline “Welcome to the Age of Anger.” In fact, great optimism and great pessimism are both alive and well today. Citizens of the UAE, Switzerland, China, India, Singapore, Sweden, Indonesia, Denmark, Australia, Finland, Germany, Austria, Thailand and the UK were net positive when asked how things were going in their country. Citizens of Italy, Brazil, France, Spain, South Africa, Mexico, Poland, Japan, Belgium and the United States were net negative in their perceptions of their country’s current wellbeing. And, there were significant differences in optimism and pessimism between emerging markets (40% net optimism about their children’s future) and developed markets (9% net pessimism about their children’s future). It is truly the best of times and the worst of times. A belief that “people are angry” misses the point that while “Penny” (female, 50+, no college degree, developed market, smaller city) is very pessimistic about her children’s future, Farah (female, 50+, no college degree, emerging market, large city) is extremely optimistic about her children’s future.
Another questionable assumption is that “globalization” is unpopular. While it is true that developed market segments like “Stanley” have a net negative view of globalization, globalization still has a net positive image in developed markets (36% positive vs 23% negative) and a very positive image in emerging markets (60% positive vs 10% negative). And, while Belgium, France, Switzerland, Italy and Austria have net negative perceptions of globalization, globalization is extremely popular in India, China, Brazil, the UAE, Singapore, and Indonesia. In fact, this data explains Chinese President Xi Jinping’s recent defense of globalization in Davos.
Moreover, when globalization is unbundled into (1) idea exchange, (2) product exchange and (3) labor exchange, most elements of idea and product exchange are popular in both emerging and developed markets.
Leading in a 5G World
In order to thrive in an evolving and accelerating 21st century, business leaders need to challenge their models. This will require listening to and engaging with a wider range of stakeholders, to the 48 Faces of the Five G World. Business leaders can and should engage with society, focusing on the basics and building a stronger reputation. They can and should defend the free market as an engine of growth. And they will need to prepare stakeholders for a disruptive wave of automation, advocating for re-skilling and up-skilling as robots and algorithms disrupt labor markets. In fact, our research finds that between 10% and 23% of employees believe their job will be replaced by automation or cease to exist, with employees in manufacturing and financial services most likely to anticipate technological unemployment.
Business leaders cannot hide. They need to engage in the Five G World and walk to the problems.