AI. climate change and geopolitical tensions challenge change management, strategy and top leadership
When the static becomes dynamic, the value of prevention multiplies.
In the last 2-3 decades, we have become aware of our climate and environmental impact. In the last 8 years, we have also seen that there are political limits to globalization. And over the past 3 years, we have woken up to AI, which can increase our welfare but challenges our perception of what it means to be human, our self-determination. These are examples of fundamentals reshaping our world. This complicates decision-making. Ecological pressure sets external limits to growth, and sustainability is thus part of the pricing model. AI increases growth opportunities both in the short term (efficiency) and in the long term (innovation), but requires a sharp focus on ethics and governance. "Trade fragmentation" creates a new geopolitical economy where value creation and its global (re)distribution is redefined.
When the static becomes dynamic, the value of prevention multiplies.
We have created the problems ourselves, and we must solve them ourselves.
Fire gave us power, money gave us something to rely on, and science made us deadly, according to Yuval Noah Harari. Climate change is a byproduct of fire, because energy is a result of heating. But it is also a product of our trust in money, as it motivates us to produce more than strictly necessary. Finally, it is a product of science, which has created inventions that make it possible to be four times as many people on the planet as there were 100 years ago.
But the increasing speed of growth has outpaced our ability to understand, adapt, and invest. The result is a climate crisis that threatens to become the greatest humanitarian disaster of modern times.
In the future, political arenas will include issues such as climate migration, explosive pandemics from virus- and vector-borne diseases, and a global struggle for clean drinking water.
This storm of changes forces us to alter our behavior faster than ever before. Prevention will become a necessity, but it can only shield us from the worst consequences.
According to George Bernard Shaw, economics is the art of getting the most out of life.
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Top Leadership is About Change
Top management is primarily about change: Seeing change from a long distance, preparing the company for change, and ensuring that changes are fully implemented. Change and development are interconnected: When the wind blows, you can build windbreaks or windmills.
The safest change management happens before problems arise
Mange grundvilkår for virksomheder forandres stadig hastigere. AI påvirker bl.a. hvordan vi arbejder, klimaforandringer påvirker bl.a. kunders behov og forsyningskæder og desuden ændres mange af de brede rammer for køb og salg. “Trade fragmentation” betyder i dag, at global samhandel fortsat stiger. Men den polariseres mod økonomiske superzoner, og den kræver iblandt, at der forarbejdes i “connector” lande. Forsyningskæderne bliver stadig mere organiske og dokumentationskrævende.
One thing is to create changes. Another is to create smart changes at the right time and place. This requires, among other things, that we understand what has led to the present. Have we overlooked some fundamental changes in customers, suppliers, or market structures because we, for example, focused too much on our present? This is where crisis management and turnarounds become necessary. It is expensive and uncertain when you reach that point.
How can AI be used for more than just an efficiency tool?
How can AI develop the business without aiming for the average?
How do climate changes affect suppliers and customers, and how does "trade fragmentation" affect these?
What future opportunities can the business already exploit?
What does it take to bring others within reach?
Change Comes from Within When We Are Aware of External Changes
As human beings, we are predisposed to optimize within given frameworks. As a result, we often overlook when those frameworks shift. The risk increases further when we discuss the present and the future with the same people who receive the same inputs as we do. That is why it is important to periodically disrupt the discourse. Change is the prerequisite for progress.
Do we truly understand which needs we are actually meeting? Does anyone really need a phone, for example, or do they need a tool for communication, entertainment, and knowledge-seeking? Customer needs evolve over time, and the same is true for our own needs in relation to suppliers.
Do we objectively respond to the news stream? The eye and brain are biologically predisposed to see what fits into our preconceived notions (e.g. RPE principles). This creates bias. Are we therefore completely sure of what is happening around us? Do we understand what is truly driving the changes? Are we aware of the choices we are making, which inevitably entail exclusions?
Geo-economics is Again Relevant for Top Leadership
Geoeconomics has experienced a renaissance in recent years. The concept refers to the intersection of geography, economics, and international politics. It explains how economic tools influence national interests and geopolitical objectives. How do trade, investment, financial policy, and technological development affect power balances and relations between states? It is about understanding the logic of the global order.
Central components thus include:
- Trade policy, where economic instruments such as trade agreements, investments, sanctions, embargoes, currency policies, financing, and technology influence a country's political behavior.
- Geographic considerations, i.e., ensuring supply routes for goods and energy.
- Strategic goals, such as national security, regional influence, global power balance, and securing critical resources and infrastructure.
- Technological freedom, such as research and development and protection of intellectual property rights.
- Politics and diplomacy are the executing arm of geopolitics. They influence the frameworks for economic development. Geo-economics, on the other hand, shows how geopolitics is enacted.
"Follow the money"
Supranational institutions are often weather vanes for geoeconomic trends, such as the Bretton Woods institutions, the IMF and the World Bank. In addition, the range of possible futures is being reshaped by unions like BRICS+ and Mercosur, as well as free trade organizations such as CPTPP and RCEP. Finally, financial infrastructure such as SWIFT and CBDCs can influence how countries and companies settle transactions with one another.
I de senere år har vi desuden set problemstillinger opstå, der påvirker alle klodens indbyggere, f.eks. AI og klimaforandringer. Men vi påvirkes forskelligt. Det kan være med til at forklare forskellige landes klimapolitikker og indbyrdes konflikter. Vand og fødevarer bliver f.eks. knappe ressourcer i fremtiden. Den tidligere britiske premierminister Lord Palmerston brugte udtrykket: “Der er ingen permanente venner i geopolitik, kun permanente interesser”.
Long-term influences often creep in gradually. That’s why we don’t always notice them. But when we occasionally step back and take a helicopter view, they may have grown significantly.
