The instability of the present world is going to characterize our lives for at least the next 5 years.
We have been elaborating various models that show the shift of various fundamentals. When the shifts are combined a new equilibrium will emerge.
1) Energy Crisis
At present Natural Gas is the key reference. However, due to the localization of supplies, the geopolitical threats and the complexity of distribution, other forms of Energy are becoming cheaper, more strategic and ultimately more independent.
The acceleration of Renewables associated with the Electric Vehicles adoption will destabilize the "stable" grid system. Hence new Business Models supported by innovative technologies will come to fruition to transform the Energy Matrix
2) End of Globalization
The CoVid pandemic and the Ukrainian War have destroyed the fundamentals of Globalization. Countries and Corporations have discovered the fragility of a system based on delocalizing everything. The consequences in terms of strategic costs, environmental and social exploitation are far more negative than saving few cents on a product. By the way, on average 45% of every product and service cost is.....Energy!!!
A new form of Regionalism is naturally emerging where strategic supplies will be produced locally or through a network of "like-minded" partners both in the sense of companies and countries. Strategy over Cost.
3) National Interests
The direct consequence of the point above is that constituencies and political leadership will be more focused on their own "garden". The case of Germany going alone in the Energy crisis management instead of coordinating with the other EU members is a clear sign. This movement will be across the board independently of the political orientations. It will go deeper even from one region to another from town to town. It is a complete paradigm shift from what we have known over the past decades.
4) Tighter Capital Access
Carry Trade used to be the "advantages" financial investors (or speculators) took of Japanese financial crisis which lead to BoJ to drop the currency base points to the negative. Now the entire World is trying to come out of a Generalized Carry Trade...and the costs in terms of access to capital and inflation (building on the previous points) are going to foster instability for at least 5 years.
5) Distributed Talent
The only great opportunity is that following the pandemic lockdown, talent is now ubiquitous. The "work from anywhere" approach will redefine the boundaries and the modes of operations of large corporations which thrived in the former context.
The new trend, call it Business Regionalism, will be that of stronger partnerships which optimize the use of capital while enhancing the individual contributions. Large corporations to survive will start spinning off business activities and allow for intra- and extra-moenia relationships.
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The World needs a new Frontier to expand and drive our positive energy forth instead of coiling back in and annihilate itself.
We believe that this is the time of a novel approach to Resource Management.
First of all, let's identify the 3 main resources for every business leader:
courtesy of Wizardy Budget
Although more expensive it will remain the most accessible and cheapest utility. However, most strategies will be developed beyond the dependency on money.
The access to the right people is becoming limitless....because the individual will be in charge of deciding with whom to collaborate with his/her talent. Finding the right people will become more challenging because it will not be a matter of "fitting the person in a box" but allowing for shared knowledge flows. Small businesses will have access to Smart and Agile business leaders branded by their pragmatic success more than large Company names. The mantra will be "tell me what you can contribute into the future" vs. "What have you done so far".
The most relevant commodity. The only one that is not reproducible. This is the Time to select the Best People that can accelerate your business venture. Don't ever trade time for money...while time can only be shrunk by "emotional intelligence", engagement and passion.
This is the time for companies of every size to push the boundaries and contribute to designing the new equilibrium.
The Future is Bright!!
It only takes resilience and visionary leadership to own the Future.