Can you see the waves of creative destruction?
It’s popular to think that globalisation unstoppable. But is it really unstoppable? Global growth forecasts have been downgraded, Brazil is threatening an Internet clampdown, nationalism is rising in Europe and fighter jets are being scrambled in Asia.
So what’s happening?
It’s called creative destruction.
Creative destruction is something that capitalism is supposed to relish – tearing down old rules and finding new innovative ideas. Creative destruction typically follows hard recessions – like the Great Recession. But the waves of creative destruction on the horizon aren’t just driven by recession, they are also driven by a changing world order as states, financial markets and even Joe Public, try to find new ways of working together.
Creative destruction can be upsetting and we naturally avoid thinking about it. But think about it we must if we are going to see future challenges – and opportunities – before the competition. But there’s another reason why we have to think about these issues – considering them now will help to build a resilient organisation and resilience could well be the number one competency that organisations need to succeed in an unpredictable world.
So, to build resilience we have to look away from popular views of the future that have their feet, or assumptions, in a past world. The following four questions will help you to both challenge popular views and to start to develop different perspectives on the shape of a future world.
Question 1: What type of globalisation is the world going through?
Globalisation is a word that everyone uses but we often don’t define what it means. In practice, we are referring to only one type of globalisation and that is economic globalisation. Basically, this is generating more wealth by creating freer markets. This paints the picture of a very understandable and rational world; after all, surely everyone wants to be rich?
But surely there can’t be other forms of globalisation? Well, the Great Recession lifted the shackles off two other forms of globalisation that we ignore at our peril. If we don’t consider all three forms of globalisation then our views of the future and the implications for our businesses will be grossly distorted.
The second type of globalisation, which is making its play now, is security globalisation. Whilst economic globalisation is all about the creation of wealth and the power of free markets, security globalisation is subtly different – it says ‘Look, the world is going to be rough and tough out there – but don’t worry – stick by my rules and you and those dear to you will be safe and free from hunger.’ The big thing to remember is that it is power of the state that sits firmly behind security globalisation. It is allied to thinking in Russia and in China and in many eyes, it is as legitimate, if not more legitimate, than economic globalisation. And just to illustrate the relevance of security globalisation, the man who is said to believe that regionalisation is more reliable than globalisation, and is attempting to build a Eurasian Union, Vladimir Putin, has just been voted by Forbes magazine as the world’s most powerful man.
But there is yet another, a third form of globalisation, that we must be aware of and that I will call ‘values globalisation’. This is nothing to do with security or financial wealth. These have little credibility for the followers of values globalisation. I am of course here referring to religion, but I do not want to limit our thinking just to religious causes. You might just want to pause to consider what could happen to the Eurozone’s near 20m unemployed – or how those 20m minds might be influenced in coming years.
So, we need to think about the future as a contest between three types of globalisation. Which will dominate? Or could the world divide into different zones?
Q2: What about consumerism?
Are we really going back to consumer fuelled growth, a world of materialism or are we on the threshold of the biggest shift in consumer behaviour that we have ever seen? Well, there is emerging evidence that we might just be. Research tells us that the Great Recession might just have changed decades-long trends, especially amongst the young. Concern for others and the environment may all be going up and materialism could be going down. So, could the family and experiences replace materialism? Quite possibly, and the seeds are there both in the West and the East. This is an essential area for debate as, in addition to influencing our strategy, it influences, in turn, the purpose of business in a changing world.
Q3: Big state, big state.
Established thinking, linked to free market capitalism, is that the financial markets know best and can act more quickly than states, especially in times of crisis. So the state will get smaller. This ignores the coming dominance of state capitalism. Just add up the GDP of emerging economies that have grown through capitalism under the strict control of the state. So start to consider a world where states might possibly want to do less, but will want to control more.
Q4: What is our purpose?
This fourth question builds upon the first three and looks at the purpose of business – specifically is this the end of ‘doing more with less’ – the mantra of minimising costs and maximising short-term profits? Will ‘doing more with less’ really solve the problems of inequality facing advanced and emerging economies alike? So is it the start of ‘helping more with the same’? This is a critical question as the relationship between business and society could shift quite dramatically – and rapidly – in coming years. You could call it capitalism’s own creative destruction. It’s an important area to consider as one needs to avoid making a strategic decision now that just might be socially unacceptable in a few years from now.
Do spend time thinking about these questions, after all, there’s a world that we need to understand waiting for us just around the corner.
This post is an abbreviated version of my presentation Is our industry always going to be here? given at The Insurance Network 8th Annual Congress, 14th November 2013, London.