Alumni urged to adopt a “moon shot mentality” to build a prosperous, sustainable and inclusive shared future
The climate emergency, the rise of anti-democratic populism and a surge in cyberattacks are just some of the crises threatening our shared future, said IMD Professors at the Annual International Alumni Event in Lausanne, as they challenged executives to take action to build a more prosperous, sustainable and inclusive world.
“What if our best future is still ahead of us?”
This was the rallying cry from Mary Robinson, Former President of Ireland, in her keynote speech on 'Climate Justice' on the first day of the 2022 International Alumni Event held in Lausanne.
Robinson, who is Chair of the Elders and a former UN Special Envoy on Climate Change, urged leaders to increase “by a factor of 10” the intensity of their efforts to avert a climate disaster.
“You have to leap into a new era of activity - a moon shot mentality - because that is what it is going to take,” she said, calling for a ‘just transition’ away from fossil fuels towards cleaner energy “without unleashing a tsunami of human rights abuses.”
“The opportunity is for governments, investors, mining companies and civil society organizations to come together to develop a new investment model aimed at supplying a renewable energy revolution, while building shared prosperity, public trust and strengthened governance,” Robinson said.
More than 150 alumni were welcomed back onto campus for this year’s event on the theme of Our Shared Future which addressed topics including cybersecurity, the role of emotions in leadership and the turmoil roiling global supply chains.
Rising income inequality is challenging democracy
Among the top worries preoccupying alumni at the event, were the climate crisis, economic inequality and the demise of democracy.
Professor David Bach, Rio Tinto Chair in Stakeholder Engagement and Dean of Innovations and Programs, explored how rising income inequality is fueling populism that, in turn, is leading to a demise in democracy during his session on The Global (Dis)order. The share of the world’s population living in a ‘free’ environment has fallen to just 20% in 2021 due to the proliferation of authoritarian practices, he said.
Bach highlighted the rise of anti-democratic populism along with the great power rivalry between the US and China, growing stakeholder scrutiny and macroeconomic instability as the four underlying trends contributing to the mounting crises facing the world.
“We are not going back to anything resembling ‘normal’ or ‘pre’,” he said. “There are enough underlying structural forces that are driving these turbulences which means that it’s harder for you to plan, and it’s more important than ever to be clear about who you are and what is your purpose.”
To deal with this uncertainty, organizations need cash, slack and flexibility, he said. “You still need a strategy but don’t become trapped by your strategy as the world is going to change.”
Supply chain as a C-suite priority
Among the topics that have shot up the priority list of top executives since the COVID-19 pandemic, is the supply chain crisis.
“We are having a discussion in the C-Suite and at the board level, and that’s new, said Carlos Cordon, Professor of Strategy and Supply Chain in his session probing whether we are seeing the end of globalization.
Cordon spoke about how we are moving “from a McDonald’s world” - referring to the global fast-food chain that offers a standardized menu based on customer food preferences the whole year round - to a “chef’s world.” This means businesses will no longer be able to guarantee optimized delivery and service of a standard product but will instead have to start producing goods based on what is available, much as a chef tailors a menu to seasonal produce.
“The idea of buying everything from China and Vietnam has gone. Everyone is diversifying. It’s a different ball game,” he said.
This reorganization of supply chains means many suppliers will be in a position to exert their market power over companies. But for canny businesses, it also represents an opportunity, such as the ability to raise prices due to scarcity and capacity constraints.
Users are the weakest and strongest line of cyber defence
In her session on Cybersecurity: The Changing Landscape, Öykü Işik, Professor of Digital Strategy and Cybersecurity, discussed how digital transformation, Artificial Intelligence and a booming cyber extortion industry have led to a surge in cyberattacks.
Among the main weak spots in companies’ cyber defences are users and employees, she said.
“Today’s hackers don’t really have to have technical information. They are much better off if they have good social skills, tricking people into sharing sensitive data,” she explained. But if they are well trained, they can also act as a firm’s strongest defence.
Some of the most proactive companies are hiring outsiders – known as ‘ethical hackers’ - who can stress test your organization’s cyber defences to try to figure out the weaknesses before the hackers do.
Another way to protect society from cyberattacks is to talk more openly about them, said Işik. “When companies swipe cyberattacks under the rug, we can’t learn from them,” she said. “But not dealing professionally with an attack, is far worse for your reputation.”
The biggest market failure of all time
“It doesn’t matter whether you and I believe in climate change because the regulators believe in it,” said Karl Schmedders, Professor of Finance, at the start of his session on why climate change is the biggest market failure of all time.
Less than 25% of the CO2 emitted is currently priced, Schmedders said, but noted carbon permits and taxes are expected to increase in coming years, pointing to the European Union’s Carbon Border Adjustment Mechanism which is designed to fix the problem of carbon leakage.
A further hurdle is that the most powerful people in the world – politicians, business leaders and policymakers – have a planning horizon of five years at most, said Schmedders.
“How many bad quarters can you have before the board fires you or your CEO?” he asked. “We have a complete mismatch between the incentives for the most powerful people in the world and the problem of climate change.”
To overcome this short-term thinking, we need to change incentives he said, urging executives to ask whether they can strengthen the ESG-based incentives within their own organizations.
The role of emotions in leadership
In the final session, George Kohlrieser, Distinguished Professor of Leadership and Organizational Behavior, focused on some of the internal challenges we may all be facing as we navigate the future.
“Emotions are not often talked about in most organizations, but are a factor in all decisions that are made,” he said. “Often we ignore the question ‘how do you feel?’; we prefer the question ‘what do you think?’ But when you disconnect from your emotions, your life is going to suffer.”
As a leader. it becomes very important to understand that what might trigger feelings of anger and sadness in the present are linked to our earlier experiences.
Although the world seems increasingly volatile and uncertain, getting depressed about the state of affairs is a destructive use of emotion,” Kohlrieser concluded. “There can be anger, fear and sadness; it’s about being able to know what you have control over and what you can’t.”
“For most people the future is nothing more than a memory of the past," he explained. "We have to be able to get that mindset change. You can’t change your history, but you can change how you see and feel about it.”