The World Economic Forum (WEF) kicks off January 23rd to 26th in Davos-Klosters, Switzerland. This year’s theme is about “Creating a Shared Future In A Fractured World”. From the program notes for this year’s event, WEF sees the following:
At the close of the 20th century, the presumption was that greater economic interdependence among countries, buttressed by liberal democratic institutions, would ensure peace and stability well into the new century. The global context today has changed dramatically: geostrategic fissures have re-emerged on multiple fronts with wide-ranging political, economic and social consequences.
Realpolitik is no longer just a relic of the Cold War. Economic prosperity and social cohesion are not one and the same. The global commons cannot protect or heal itself.
Politically, governance is being transformed by new and contending strategic narratives. Such narratives have emerged in response to national, regional and global divides, but many of them are bereft of the innovation, inspiration and idealism essential for transformational change. Economically, policies are being formulated to preserve the singular benefits of global integration while limiting its shared obligations. Yet, such policy prescriptions are fragmented, biased or uninformed when considered in the context of sustainable development, inclusive growth and the Fourth Industrial Revolution.
Socially, citizens yearn for responsive leadership that addresses local and national concerns; yet, a shared identity and collective purpose remain elusive despite living in an age of social networks. All the while, the social contract between states and their citizens continues to erode. Changing the situation on the ground requires more responsive governance, but this cannot absolve governments of their regional and global responsibilities.
Ever three to four years, Constellation publishes its futurist framework based on the PESTEL model of systems thinking. Constellation approaches 2020 with this systemic point of view. The full PESTEL report examines the political, economic, societal, environmental, and legislative (PESTEL) macro trends that will affect the business disruption ahead. This framework serve as the basis for Constellation’s research foundation across seven business themes. These PESTEL trends can be summarized as:
- Political (P) pressures point to a lack of digital proficiency in the political class
- Economic (E) trends exacerbate digital business disruption
- Societal (S) shifts showcase the digital divide ahead
- Technological (T) trends boost digital opportunities
- Environmental (E) factors frame long-term scenarios
- Legislative (L) lethargy drives knee jerk reactions
Success in navigating these trends will require executives to develop a strategy for dominating digital disruption. Board rooms must be cognizant of such changes in order to make the tough decisions required to thrive in the disruption ahead. This blog post focuses on the first area Political Outlook.
Global governments face a confluence of forces with worldwide chronic unemployment, stagnant economic performance, growing social program obligations and continued polarization of political ideology. A generation of voters are jobless at the beginning of their careers. OECD statistics show over 73 million, or 12.6 percent, of global youth are unemployed. Political trends play a role in the acceleration or hindrance of business disruption. Amid those forces, governments seek to address social unrest and quell the impact of failed policies and disenfranchised citizenry:
The rural and urban digital divide widens with no remedies in sight (2018). From BREXIT to the 2016 US election to the German Parliamentary elections, the digital divide between urban areas and the rural citizenry have never been greater. Rural areas have not seen the direct benefits from high technology and globalism. In fact, the rural class blames technological advancements and the political ruling classes for creating policies that have disenfranchised the rural areas, resulting in blight, economic depression, senseless regulation, job loss, and a decline in overall opportunity. On the other hand, the urban class has benefited the most from the technological gains and globalist policies with greater wealth creation, career advancement, and political influence.
Constellation’s POV: Democratic governments must address this digital divide or face continued populist uprisings and a distrust of government institutions.
- Digital dictatorships proliferate in the name of security and order (2018). Expect more countries incentivizing citizens to connect online in order to identify relationships, improve services, encourage commerce, track location, and identify aberrant behavior. While some countries like China will continue to directly provide digital services in order to control its citizenry, others will encourage private companies to serve as an intermediary to provide those services. Ten years ago, if someone told you that citizens would voluntarily provide information about all their preferences, all their friends and relationships, and all their whereabouts on a government website, one would have thought this to be crazy. Today the proliferation of social networks, home assistants and devices, the citizenry is unwittingly providing the data for not only corporations but also governments to mine and spy on.Constellation’s POV: The political class and the citizens must define the rules of engagement and the tradeoff among privacy, convenience, security, and freedom.
- Echo chamber polarization accelerates among the masses (2018). Fake news, mass personalization of content, and tailored digital experiences have resulted in a more divided electorate. The application of artificial intelligence to content delivery exacerbates polarization by delivering only the content individuals want to receive to feel good, avoid conflict, and validate their own beliefs. The result – mass confusion among what content represents fact versus fiction. The “fake news” phenomenon and the lack of intellectual curiosity will lead to greater political unrest. With no true or objective arbiter of the news, and the reliance on ad dollars to fund media, the role of journalism has died.Constellation’s POV: Governments must work hard to help the media reclaim their role in providing a trusted institution and objective voice or face even more polarization and potential revolution in their governments.
- Dynamic leadership models (2018). The need to create responsive and responsible leadership is a hallmark for success in digital transformation and jump starting growth inside organizations. Dynamic leadership describes a model where leaders follow a set of immutable traits and balance foundational attributes of leadership. This new framework takes into account a multi-dimensional approach and addresses the challenges existing leadership models often neglectConstellation’s POV: The global call for responsive and responsible leadership will require a new way to approach the timeless topic of leadership. Instead of taking a classical binary or rigid approach, learn the five immutable core traits and develop a balance of 14 foundational attributes as a guide to successful and sustainable dynamic leadership.
Existing policy lags the pace of change in technology and new business models (since 2014). The impact of digital disruption on the economic, societal and environmental pillars is pushing the limits of today’s existing policy and political models. From privacy to new people-to-people networks, policy has fallen behind the pace of change and political gridlock hurts citizens. Just recently in the United States, city governments sought to ban sharing-economy leasing models such as Airbnb by restricting how long and what kind of short and long term rentals a private citizen could allow on his or her own property. In another example, the Target customer data breach of late 2013 and the Equifax debacle of 2017 highlighted how American privacy legislation is woefully inadequate and needs reform.
Constellation’s POV: The good news is that in the European Union and elsewhere, the privacy laws have sharper teeth and enhance innovation without trampling on individual rights. Legislation such as GDPR will provide some protections for the global citizenry.
Pay-to-play legislative influence hinders disruptive business models (since 2014). The high cost of campaigning for public office creates a kleptocracy in places such as the United States and the European Union. Paying a lobbyist $10 million to create an economic impact in the billions of dollars makes business sense. However, the pay-to-play influence model only exacerbates a byzantine set of laws that adds to overall business friction through additional accounting, legal and political costs.
Constellation’s POV: Governments should begin the regulatory reform to update past laws, remove redundant regulations, and streamline rule making to limit excessive costs of government.
Technology ignorance plagues the political class in the West (since 2014). Across the Western economies, few elected officials have science backgrounds. Meanwhile, scientists hold eight out of China’s top nine government posts. The lack of science and engineering fundamentals often hinders digital business discussions and the implications of technology policy are unclear to decision makers, who become timid and dependent on lobbyists and other influencers who peddle biased information. For example, lack of understanding around climate change and pollution control technology creates an emotional discussion instead of an objective scientific method approach. Furthermore, innovative business models often must face entrenched political powers that are, for all intents and purposes, ignorant.
Constellation’s POV: Foundations and non-profits may want to create new missions that will help provide objective data and insight without poltical biases. Former Microsoft CEO, Steve Ballmer has led the way with election data from the Ballmer Group as one example to clear the air and bias on planning data for making policy decisions.
Have you taken account a futurist framework in your 2018 to 2020 planning? Afraid of a business extinction event like Kodak? Would you like to join a network of other early adopters? Are you ready to begin your digital transformation journey? Learn how non-digital organizations can disrupt digital businesses in the best-selling Harvard Business Review Press book Disrupting Digital.
(Cross-posted @ A Software Insider’s Point of View)
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