How CEOs are adapting to new rules of power

SPEAKER_1 (0:00)

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Peter Thal Larsen (0:33)

When the British Prime Minister Harold Macmillan was asked to name the greatest challenge for a statesman, he is said to have replied, events, dear boy, events. Whether he actually uttered those words is a subject of some debate, but the sentiment would be familiar to anyone sitting in a corporate boardroom today. In the last five or six years, chief executives have had to manage through a global pandemic, a sharp increase in interest rates, trade wars, actual wars, supply chain disruptions, political upheaval and much else besides. What makes all this even more challenging is that the old rules no longer apply. The broad framework that guided global business and finance for the decades after the Cold War, that most governments were largely in favour of lowering trade barriers, free flows of capital and greater economic efficiency has been shattered. Corporate executives now have to navigate a world where raw political power trumps considerations of shareholder value. It's a world that few are prepared for.

So today we're going to talk about geopolitical upheaval and business. It's what we do at Reuters Breakingviews. We tap our best sources around the world for fresh insights into global economics, business and finance.

I'm your host, Peter Thal Larsen.

To talk all this over, I'm delighted to welcome Tina Fordham back onto the show. Tina is a geostrategist and advisor to boards, executives, investors, and government and military leaders. She spent 17 years at Citi, the global bank, where she was the bank's chief global political analyst. Before that, built Eurasia Group's financial markets research business, the first of its kind for institutional investors. For the last four years, she's been running her own shop, Fordham Global Foresight. Amid all this, she has found time to write a new book with the appropriate title, Mad World, A Geostrategy Survival Guide for Leaders. Tina Fordham, welcome back to The Big View.

Tina Fordham (2:26)

Great to be back with you, Peter.

Peter Thal Larsen (2:28)

I know. It's been almost two years, actually, since we last spoke. A lot has happened, which we will talk about. Well, I just want to start with the book, which you call it Mad World.

When was the world last this mad, if ever?

Tina Fordham (2:46)

That's why I chose this title for the book, in fact, because, and I described this, for the more than 25 years that I have been talking to investors and business leaders about geopolitics. Every time I'd walk into the room, people would say the same thing, you must be busy, the world has gone mad.

And yet, I think most of us would agree that it feels as though the world has become progressively madder over the course of the past 25 years. So there's something in just that sense that for as long as I can remember, people's perception has been that the world is not making any sense. So this isn't new. And yet, every day and every boardroom I walk into, people seem surprised.

Peter Thal Larsen (3:34)

Yeah. And so I guess we can talk about why that is in terms of the big set of geopolitical shifts or the things that are changing. But I guess one of the things people do in these periods is they reach for historical examples. I was reading over the summer a new book called 1873, which is about the crisis of 1873, which frankly I didn't know very much about until I started reading that book. But you can feel people reaching for these historical examples and saying, maybe that period will help us understand the present at the moment. Are there any periods that you look back to and say, actually, this is quite useful?

Or do we just have to accept that we're in a new world?

Tina Fordham (4:21)

Looking for those historical parallels is one of the few things we can do to help us find some touch tones and some comparisons. But there hasn't been a period like ours for a couple of notable reasons. One is, and perhaps the most important one is, this period of the Pax Americana. Now, most people don't know what that term means, even though we had been living in it until around about, let's say, 2006