Focus on the long term and understand the context. These are the two essential capacities that, according to Professor Jordi Canals, companies and any level of government must have in the current global political, economic and social landscape.
In an article published in the Spanish economic newspaper Expansión entitled “Understanding the World to Come,” STI’s vice president explains that “with the most serious international geopolitical crisis in 50 years and an economic shock with many diverse effects, high-beam headlights are essential.”
Therefore, he urges companies to “maintain an entrepreneurial initiative to react with agility and speed to unexpected changes” and to simultaneously “have a certain point of view about the future, understand the trends that will define it, think about alternative scenarios and mark an itinerary to follow, with flexibility if assumptions change.”
“Companies and governments must remember that the future is not an extension of the past, but history does help to understand where we came from and where we have stumbled before,” says Canals. He goes on to name six key factors to consider in corporate governance, with a mind to the international scenario in the immediate future and taking into account the current global circumstances.
1. A new, less stable and more volatile international balance
According to Canals, the current world order, with clear rules of play and international institutions respected by all countries, is disappearing in favor of “principles of self-interest and nationalism in their purest form.” The rise of populism and the likely deterioration of the international order due to the war in Ukraine are changing the global situation. Therefore, the professor recommends that companies be aware that “the open international order that has been dominant since the 1990s and that has allowed a significant expansion of international economic integration” can change radically.
2. A semi-globalized world
The CCG president believes that “economic globalization as we have experienced it in the last two decades will suffer a significant slowdown, if not a setback,” and that the current model is already one of “semi-globalization.” This can be seen in the efforts being made by all types of companies to relocate the value chain in certain regions of the world, he continues. In that sense, the professor urges companies to “develop scenarios and raise again the question ‘what would happen if…?’” Nevertheless, his wish is that “within a few years, we can return to a period of intense globalization, because its advantages for most countries are greater than the disadvantages.”
3. Rising prices
The increase in the price of fossil fuels, raw materials in foods and certain precious minerals “augur not only higher inflation, but also the desire for greater economic independence in the countries that can afford it, and less integration.” This is why Canals suggests that governments must face this reality responsibly, pointing out that “if the problem of inflation is persistent, interest rates will necessarily be higher.”
4. The need to improve management efficiency
In the article, Canals demonstrates his conviction that “companies must be efficient,” noting that “companies that limit themselves to reducing expenses will be exhausted and bereft of creative capacity to generate new ideas and business concepts.” He believes that some ideas, products and current businesses will become obsolete, but that others will be born, and advises managers to think hard about which models will likely prevail in the future, in order to begin investing in them.
5. Customer-centric companies
Companies cannot simply defend a policy of passing their own crisis-induced increased costs to their customers, Canals says, cautioning companies to take care not to be arrogant but rather to focus on their ability to serve their customers. It is time to highlight, he adds, the reasons why a company exists, and to “serve customers in an effective way, generating a reasonable profit.”
6. Investing in people
At a time when many companies are experiencing greater employee turnover, it is necessary for companies to put more effort into investing in their people, Canals asserts, concluding, “Many individuals and families are struggling to emerge from the Covid-19 crisis. The companies that will come out stronger are those that manage to motivate and engage their people in these complex moments.”
