Chief Executive Officer
Companies must prepare for growth in 2021, the coming year will be full of opportunity and riskNick Allan | Chief Executive Officer
New Year is usually celebrated as a beginning, a time of new possibilities and resolutions. It might seem hard to focus on such things when 2021 has been celebrated mainly on the basis that it is not 2020. With the pandemic still very present, it’s tempting to see optimism as misplaced. That would be too short-term: rapid advances in vaccines show a way out of the current situation and businesses that remain clear-eyed and healthy will find plenty to be excited about in the coming year. For some companies, the challenges of 2020 were a growth accelerant, but for many others survival was the main objective. For both, the extraordinary circumstances of the past year will have brought significant changes. All businesses need to learn the lessons and embrace the positives where they can be found.
The middle of 2020 saw many companies and individuals discussing how work would change in the future. The pandemic, it seemed, had ushered in opportunities for people to rethink how organisations and economies could function. New efficiencies and supercharged technology would enable a healthier balance between work and life.
However, after almost a year of stop-start pandemic restrictions, many people’s idea of a new normal is one that looks rather similar to how things used to be. The value of office attendance and business travel is pretty clear when neither is possible. Many international companies, including Control Risks, are still working through the emerging dynamics of real estate, global workforce distribution and changing client expectations, not to mention supply chains. As the physical and regulatory impacts of global warming rise ever higher up company agendas, it is likely that many of the innovations of 2020 will endure as useful ways to reduce carbon emissions.
For those corporates that had not yet been schooled in the value of business continuity and resilience plans, crisis management teams and investments in cloud computing, 2020 brought a reckoning. As you would expect, Control Risks was well placed in this regard and we were pleased to learn that practising what you preach is indeed good advice. However, for us and many others this was one of the few occasions where we were dealing with a crisis that was genuinely global but also intensely local. Most international organisations discovered the complexities of national employment legislation, the differing risk appetites of their people and the difficulties of consistent communication across multiple geographies. As the year played out, monitoring the pandemic’s varying progression and impacts became essential and will continue to be so for all organisations. Our people were not unique in asking for clear and definitive answers about how the firm planned to respond.
We, like others, also learnt the value of having a firm where our purpose is understood by our people and where our culture is to be collaborative and supportive of each other. Indeed, running a business as one, global firm proved to be a real source of strength. The immediate stresses of the pandemic will fade, but judgments on how leaders behaved will live longer in corporate and public memories.
Most businesses emerge in 2021 leaner, more focused and with a granular understanding of how their people collaborate or not. The challenge is to hold onto the benefits gained, sometimes painfully, and not to slip back into easy and comfortable habits as the pandemic recedes. The coming 12 months look like being pregnant with both opportunity but also risk.
COVID-19 was the crisis that, at the political level, the world was not ready for. It brought few countries together and exposed the short-term, tactical thinking that characterises many of today’s crop of world leaders. Cooperation has been sporadic and, as other articles point out, the slow end of the pandemic will see significant friction between states. Indeed, many of the geopolitical trends that were already in evidence at the end of 2019 were strengthened in 2020. Populism and nationalism were the defining arguments across all continents, and as the global economy recovers at an uneven pace, business can again expect to find itself in the crosshairs of political contest. Tensions between new and old powers, cyber conflicts and data nationalism were key risks for 2020 and all carry on into the year ahead.
Following successive years of political upheaval, the pandemic has upended many well-established beliefs around the role of government, both in terms of social and economic intervention. It has increased focus on the rights of the individual, sometimes set at odds with the broader community. Data is receiving ever more regulatory attention and scrutiny. Governments are now clearer on the power of data, and on their desire to control it and tax those that trade in it. Indeed, so stringent are some national data protection rules that some businesses are making strategic decisions not to invest where the compliance burden is too severe. However, what has changed is that nation states are now turning their attention to how they can control and influence the technology platforms that citizens and businesses use to communicate and share data. Anti-trust suits against some of the biggest names in social media are the headline-grabbing moves that signal an increased contest between nation states and global corporations. Commercial power has always had political influence, but the trend of regulation and rule making for the past few decades has, by and large, been to facilitate trade and the flow of capital. The extraordinary wealth and global reach of some companies see them looking to shape and influence national politics and finding this frustrated by political leadership that is often relentlessly tactical and interested in immediate popularity. Tension between nation state and global business will only increase.
The relationship between business and society also came into sharp focus in 2020, with corporates often having to plot a difficult path between the concerns of employees, shareholders and politicians. As workforces return to office-based working the memories of shared experiences that shaped 2020 will not disappear. Environmental, social and governance issues will define corporate investments and futures in a way that has not been seen before. Businesses are now pushed harder than ever not only to actively engage with issues, but also to make their stance public. Where societal issues intersect with politics, business can find itself in an uncomfortable position.
The political clashes over COVID-19 are the backdrop to a world order that has been changing for some time. The institutions that have provided structure and order for the past 50 years have a fragility to them that will mean their reliability is regularly called into question. What seemed like fragility in 2020 may turn out to be the point at which some of these institutions had their resilience tested and emerged stronger. For business, long-term planning in such circumstances becomes harder. Unity is hard to find in a world of shifting national interests and contested political and economic spaces.
Amid such an uncertain outlook it can be easy to see the risks more clearly than the opportunities. However, the important lesson of other pandemics and global crises is that the years that follow usually see an outburst of creativity and imagination. The balance sheets of corporates and countries are stretched and strained by pandemic-induced necessity, but this cannot override the imperative to prepare for growth and opportunity. Uncertainty and change will accompany that for years to come, but this recession is also like no other as consumers and companies wait to do business unfettered. What will define 2021 will not only be the slow end to the pandemic but also the spark that will signal the start of a period of tumultuous growth. We need to be ready to manage the inherent risks of the times we are living in, but also be primed for success.