What if the next 20 years look at lot more like the last 2 than the prior 20?  How should you lead and build organizations in a world categorized by change, uncertainty, and shortage?  And more over, how would you generate financial results that build wealth for your shareholders, team members, and yourself?

COVID as Prelude, Not Conclusion

The COVID-19 pandemic marked the beginning of a shift in the business environment from the environment of the past 40 years or so.  The Pax Americana heralded by the election of Ronald Reagan, highlighted by the fall of the Berlin Wall, was characterized by an unparalleled series of fortunate events, unique in human history.   The rise of globalization, the baby boom, women entering the workforce, and technology applied fuel to the fire of economic growth.  What happened next was the stuff of legends. 

But no economy is a perpetual motion machine and within the success were sown the seeds of the inevitable downfall.  We see this most basically in the global connectivity that enabled the COVID-19 virus to explode globally in such short order.   The peak lockdown periods of 2020 and 2021 reintroduced uncertainty into global supply chains for the first time in nearly 30 years.  

Suddenly lean manufacturing policies that removed excess inventory no longer seemed to make sense.  Combine this with a consumer that grew compulsive in its consumption when worried about availability of supply.   No evidence existed to show COVID caused severe GI related distress, and yet consumers began to hoard toilet paper.  And much like the gold miner who chose to leave heaven when hearing of a gold find in hell because ‘there might be some truth in that rumor,’  even if you didn’t believe in hoarding behavior, to some extent consumers had to play along less they be caught shorthanded when they did need supplies.

These sorts of fault lines have only be exacerbated by other market perturbations in the past 2 years.  A Federal Reserve that responded by keeping interest rates lower for longer, contributed to a building boom.  If people were not building houses, they were buying cars.  But a global shortage in semiconductors – exacerbated by order cancellations, capacity shortfalls, demand for GPU’s to support crypto mining (and now AI) led for parking lots full of completed cars that were unable to be driven due to a lack of chips.

But what if these few examples only foreshadow the potential disruptions likely to occur over the coming 20 – 30 years. 

Other potential disruptions coming down the pike include –

• Continued acceleration of technological change – including continued growth in the sophistication of artificial intelligence
• Demographic changes leading to a substantially older and shrinking global population – labor shortages
• Resource shortage for key inputs to the green economy – including batteries, rare earths
• Collapse of start-up costs + increased availability of early stage capital – increased amounts of competition

The net impact of these will require a rewriting of the management playbook that has existed for the last 40 years or so.   In the world of the late industrial revolution and even into first phase of the “information revolution,”  leadership was about taking a given problem or opportunity, marshaling necessary resources, and then subdividing the problem into bite sized pieces until it could be wrangled to the ground. 

This was the world of the technocrat and the specialist.  The specialist reigned supreme across almost all domains as going deeper and deeper and narrower niches was the path forward. 

The problems we face today are of wholesale different order.  They are not problems of differentiation, but rather of integration.  They require the ability to see how disparate, diverse areas may overlap to produce new and novel answers to a situation. 

The leaders of today and tomorrow will be operating in a world that is dramatically different from the world of their predecessors. Navigating it successfully will require an evolution of the management playbook.  Accelerating feedback loops within organizations, nimble teams that can be deployed quickly, and even rethinking fixed vs. variable cost structures to allow for rapid change are only a few potential implications.