Navigating the Fog of Geopolitical Uncertainty: Insights for CEOs and Managers

The world was caught off guard. CEOs were taken by surprise.

Repeatedly.

The COVID-19 pandemic, the Russia-Ukraine War, and the recent escalation of hostilities in the Middle East were largely unexpected crises that have led to tragic results for millions of people. These events have also had ripple effects on global supply chains, on personal and cybersecurity, and on the resilience of nations worldwide.

Will your organization be ready for the next major crisis? 

The average manager probably doesn’t spend much time attempting to predict geopolitical earthquakes — but understanding geopolitics is increasingly recognized as a crucial managerial capability. Surveys indicate that while CEOs continue to gauge the impact of new regulations and inflation, they are also increasingly focused on the effects on business of geopolitical events. According to EY, CEOs with advanced capability to understand geopolitical complexities are less inclined to defer investment plans.

Anticipating risks in a particular region demands a broader perspective than just familiarity with local languages, politics, and history. Today’s world is intricately interconnected. At the same time, global powers are continually vying for influence and access to critical resources such as minerals, oil, and gas. But the dominance of powerhouses like the U.S. and China faces challenges. India, for example, is forging an alliance with Australia for lithium reserves and is pursuing resources such as copper, cobalt, and other critical minerals in Africa.

Grasping the subtleties of global developments requires an understanding of demographics, political systems, religions, colonial legacies, and other factors. But even if you hold a PhD in geopolitical studies, the full picture may remain elusive. Determining “reality” in our world today often seems to require groping through a haze of uncertainty rather than assessing a clear-cut set of facts agreed upon by all parties.

Breaking Through Biases 

Biases can be significant obstacles when attempting to translate information into solid opinions and actions. Biases that impact our understanding — and subsequent actions — can be influenced by factors including:

• Age: Older individuals may have lived through or have more vivid memories of certain historical events, which can shape their perception and understanding of current events. Younger people, on the other hand, may rely more on secondary sources such as textbooks or media portrayals, which could influence their interpretation. Generational differences in values, beliefs, and experiences may also lead to varying perspectives on the significance and impact of events.
• Education: Your level of education greatly influences your understanding of events. Those with higher levels of education, especially in fields such as history or social sciences, usually have a deeper understanding of the context, causes, and consequences of historical moments. The era in which your education was obtained may also be pivotal. If you went to school in the 1970s or 1980s, you would have been taught different narratives about certain historical moments than if you went to school in the 1990s or in the 21st century. Western teaching about Russia and China, for example, has evolved significantly in the past 35 years!
• Origin/Cultural Background: Cultural background and national identity can profoundly shape one’s understanding of historical and current events. Different cultures may emphasize different aspects of history or interpret events through different lenses.
• Role/Position: A person’s role or position in society can affect their understanding of historical moments. A political leader or policymaker, for example, may view events through the lens of statecraft, focusing on the geopolitical implications and strategic considerations. A historian or academic may approach the same events from a scholarly perspective, examining primary sources and engaging in critical analysis.

Understanding Influence in Decision-Making 

One might think that having detailed knowledge supported by facts would be an effective way to sidestep bias and gain a legitimate understanding of why certain situations unfold. It’s true that such knowledge can help — but in today’s world, it may not be sufficient. Disinformation, propaganda, and AI-enabled manipulation are on the rise globally. This should cause us to constantly evaluate who is presenting information and how it is being framed. Some examples:

• Selective Coverage: Media outlets may focus more on geopolitical perspectives that align with the political interests or agendas of their home countries or owners while ignoring or downplaying perspectives or events that are tangential to those interests.
• Language and Framing: The language used to describe geopolitical events can reflect bias. For example, one country’s “counter-terrorism operation” may be framed as “aggression” or an “invasion” by another country’s media.
• Lack of Context: Bias can involve omitting important historical or contextual information that provides a balanced understanding of a situation. This can lead to oversimplified or distorted narratives.
• Demonization/Villainization: Media coverage may portray certain geopolitical actors or countries in a consistently negative light while presenting others as virtuous or heroic, regardless of their actions.
• Double Standards: Geopolitical bias may involve applying different standards or expectations to different countries or actors based on political alliances or power dynamics. Actions deemed unacceptable when carried out by one country may be overlooked or justified when perpetrated by another.
• Sensationalism and Propaganda: Sensationalist reporting and propaganda techniques can be used to manipulate public opinion and support for geopolitical agendas. This can involve exaggerating threats or portraying conflicts in a way that promotes a particular narrative.
• Misrepresentation of Facts: Geopolitical bias can involve cherry-picking or distorting facts to support a particular viewpoint or agenda, leading to the dissemination of misinformation or disinformation.
• Cultural and Racial Stereotyping: Geopolitical bias can intersect with cultural or racial biases, leading to the portrayal of certain groups or regions in stereotypical or derogatory ways.

As you can see, our understanding and assessment of events can be influenced by numerous factors. Being aware of these influences is especially critical for leaders and managers whose decisions can impact thousands or even hundreds of thousands of people, including workers and their families.

As unpredictable major events unfold, are you certain that your experience and that of your advisors — even if supported by relevant data — is sufficiently unbiased to enable you to make optimal decisions? Have you taken into account any naivete or arrogance that may affect your thinking?

The Boston Consulting Group’s global C-suite survey on strategic priorities and opportunities revealed that 63% of the surveyed executives believe their companies are prepared for global shocks in 2024. This marks a 12-point increase since 2023.

With new geopolitical disruptions almost certainly on the horizon, the confidence of these leaders is likely to be tested.

Navigating Information Overload 

The influence of geopolitics on business has always been profound. What has notably changed in recent years is the rapid dissemination of both information and disinformation. While we have access to an abundance of data sources, their utility is only partial if we fail to grasp the broader context.

To navigate a complex and dynamic global landscape, organizations must prioritize supply chain resilience and sustainability strategies. However, merely forecasting future scenarios falls short. It’s crucial for organizations to develop strategies to mitigate risks that are inherently unpredictable.

And I don’t mean just the threat of the next major crisis that threatens global stability. Have you adequately thought through, for example, how you will respond if a country you decide to nearshore to later adopts an unfriendly political regime or descends into a failed state?

My recommendation to decision makers: Implement rigorous risk and diligence processes — and constantly think about potential biases that could skew decision-making and endanger the company’s business and the lives of its workforce!

Written by Jan Burian.

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