Ep 134: How CEOs Lead When the Map Keeps Moving

Michael Avery (0:00)

Welcome to The Monocle Banking Podcast, curated by Monocle Solutions. The old assumptions that things like capital and goods and data and energy will simply keep flowing is being upended this year. In this environment that we're living in with heightened geopolitical risk all over the world, think access itself has become a strategic risk. So this week, we ask how CEOs can lead when the map keeps moving.

For much of the past three decades, global business was built around a fairly powerful assumption that capital, energy, goods, data and people would broadly speaking, continue to move across borders with increasing ease. The world of globalization, that assumption is looking considerably less secure in 2026 The Middle East conflict has provided perhaps the clearest demonstration, yes, which is how quickly the arteries of the global economy can become strategic pressure points. Six months after Kearney began warning that the world was moving from open flows to contested access, the straight of her moves remained severely disrupted. Energy exporters are using costly ship to ship transfers and alternative routes to keep crude moving. And businesses are being forced to think much more seriously about the availability of critical inputs, not simply their price. And that raises a much bigger question than what happens next in the Middle East. If geopolitical instability, if trade fragmentation and infrastructure vulnerability are becoming structural features of the operating environment, how should banks and corporates and boards actually plan? Is the traditional five-year strategy even still fit for purpose? And how much efficiency should businesses be prepared to sacrifice? In exchange for greater resilience? Well, Kearney's work argues that executives need to move from forecast-driven planning towards scenario and trigger-based decision-making, with geopolitical risk increasingly embedded in things like capital allocation and in the operating models of the business. It's very much the territory our guests work in. Joining me on The Monocle Banking Podcast are Claudio Campanini, Kearney's Middle Eastern Africa regional chair, and Prashaen Reddy, partner at Kearney, who brings a particularly useful South African and African perspective to what is fundamentally becoming a global boredom problem.

Welcome, Chaps. Claudio, maybe you can kick us off. Your work now seems to be saying something quite profound, that this just isn't a period of volatility that executives need to ride out. This is a structural change in the rules of business.

Are we now past the point where leaders can speak about returning to any semblance of normality?

Claudio Campanini (2:45)

Well, you said it right. I think it has not just been the conflict in the Middle East, but if you look back in the last three to four years after COVID, we've come into many disruptions jumping in. So the normal way of doing business, the normal way of seeing business is not there anymore. There are disruptions related to supply chain, there are disruptions related to technology, there is geopolitical development, there are tariffs kicking in in many sectors.

And this is telling us that it's a bit more kind of the normal that we have to live with. That's what our report is saying and our research is saying. And that's what the business leader need to address more and more. So the stable environment may be off five to six years ago is not there anymore. And we see disruptions everywhere. And the stability is something that can not be planned anymore in our way of looking at things.

Michael Avery (3:46)

Now Prashaen, when we talk about operating through volatility, I think it's one thing that South African entrepreneurs, South African business leaders are used to going back to load shedding, port congestions. Some of the day to day running a business in South Africa really steals us for that kind of operating environment.

When we look at it in a strange way, has South Africa really been training for this new global environment? Because the danger of course is that we kind of normalize dysfunction, obviously. But what is the difference between resilience and simply learning to live with poor performance?

Prashaen Reddy (4:18)

That's a good point, Michael. I think within the South African context, of course, we've built a certain level of business resilience to navigate the context that we have, be it in logistics or in power and energy. But we must not forget the exposure we have broadly to the rest of the world. Geopolitics is a different type of disruption that we've seen affect global supply chains. Despite us having significant natural resources and certain level of independence, we are still quite dependent on supply chains that extend into the Middle East, into Asia and into other parts of Europe. Therefore, global disruptions, I think, are becoming more normal.