The geo-imperative: Business leaders must think global even if they act local

Many global corporations function like nations, with their CEOs akin to heads of state. (Image: Pixabay)
Many global corporations function like nations, with their CEOs akin to heads of state. (Image: Pixabay)

Summary

  • Amid rising stakes and instability, CEOs must pay attention to geopolitics and geo-economics. The ability to anticipate and assess global forces of change is a must in today’s volatile world.

In an acclaimed article, noted leadership consultant Justin Menkes categorized the mastery that business leaders require into three skill areas: (a) accomplishing tasks; (b) working with and through other people; and (c) self-evaluation and behavioural adjustment. A recent Harvard Business Review article on critical C-suite skills suggests that in today’s business environment, companies need leaders who are not only adept at managing finances and possess technical expertise, but also excel in people management. 

While these skills remain indispensable, the current global context demands that business leaders acquire another critical competency: geo-strategic competency, which comprises geopolitical and geo-economic acumen.

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After the collapse of the Soviet Union, the world embarked on a path of economic integration driven by globalization, near-seamless market access, supply-chain integration and outsourcing. China’s “hide your strength, bide your time" philosophy prior to Xi suggested that this trajectory would intensify, fostering greater interconnectedness. 

On the economic front, stability replaced the volatility and high inflation of the 1970s, boosting valuations of equities and assets. These developments created a favourable business environment, shaping the outlook of today’s business leaders.

However, this era of liberal internationalism has been disrupted. The shake-up of an already fragile global order, exacerbated by Trump’s victories in 2016 and 2024, has deepened the uncertainties. Today, we see a belligerent rivalry between the US and China, alongside a multipolar world where middle powers and nations from the Global South are asserting their voices through new blocs. The G20 has gained prominence over the G7, and its sub-groupings, such as the Quad and I2U2, are pursuing shared goals. 

Meanwhile, the expanded Brics, representing over a quarter of the global economy and nearly half the world’s population, is poised to influence the global economic system. These developments amid rising protectionism are reshaping the global landscape.

Also Read: Brics for India: A trade springboard, not an anti-West wall

Governments are increasingly adopting foreign direct investment screening mechanisms to address concerns about national security and foreign influence over critical industries. According to a Boston Consulting Group study, the use of investment screening mechanisms by OECD countries has doubled in the past decade. 

While these measures aim to protect strategic interests, they also disrupt global expansion and operational strategies for businesses. Additionally, the economic stability that once seemed assured has become shaky, with shocks causing significant and often non-linear impacts. Macroeconomics has therefore returned to the forefront of the CEO’s agenda.

In this context, large corporations are emerging as entities with influence rivalling that of nations. For example, only seven countries have a GDP greater than Apple’s market capitalization. Apple’s market cap-to-employee ratio is more than 160 times Luxembourg’s GDP per capita (the nation with the highest).

Also Read: Vivek Kaul: India’s GDP growth slump holds lessons in forecasting

Given their size and influence over consumer choices and daily life, many global corporations wield as much impact as nations, with their CEOs akin to heads of state. Business leaders must embrace this paradigm shift and develop geopolitical and geo-economic acumen to lead effectively.

This is particularly urgent for multinational corporations and businesses reliant on cross-border trade or at the forefront of technologies that governments seek to control. For example, in 2020, automakers underestimated the post-pandemic economic recovery and cut semiconductor orders, resulting in supply chain bottlenecks, unmet demand and price pressures that significantly contributed to inflation. This resulted in what is being called a ‘chip war’—the fierce competition between nations to control semiconductor chip manufacturing.

Business leaders must go beyond traditional skills, adopting a systemic perspective that integrates geo-strategic foresight into corporate strategy.

To navigate such complexities, CEOs must build institutional geostrategic muscle by developing specialist capabilities to monitor global developments, customize scenarios and identify early indicators of significant changes. These indicators may include subtle shifts in public sentiment (such as in Bangladesh), rather than only major events like military invasions (as seen in Ukraine). Swift and informed action when key signposts emerge is essential for effective decision-making on market entry, supply chains, asset management and employee safety.

Business leaders must go beyond traditional skills, adopting a systemic perspective that integrates geo-strategic foresight into corporate strategy. This requires a broad and adaptable lens that avoids oversimplifying complex realities. 

Geo-political and geo-economic developments and risks should be viewed as a series of evolving narratives rooted in context and history. Instead of seeking definitive answers, business leaders should aim for informed situational judgement. By fostering resilience, building dedicated capabilities and maintaining agility amid uncertainty, companies can not only navigate challenges, but spot new opportunities for growth and innovation. 

As power dynamics and influence shift, business leaders who proactively align corporate strategies with the evolving global order will lead the way in creating sustainable shareholder value. Amid today’s fragmented and unpredictable global landscape, mastering the ability to interpret and respond to global shifts is a core leadership imperative.

The author is a strategy and public policy professional. His X handle is @prasannakarthik

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