Resiliency can trump volatility

Mid-town Manhattan seemed like a city within a city on the night of November 1. It was barely 24 hours after Hurricane Sandy, and as I walked across Columbus Circle, to the hotel hosting the Financial Times Goldman Sachs Best Business Book Award dinner, the only sign of Sandy’s wreckage was dangling precariously, 50 stories up. It was the forearm(working end) of a construction crane that had snapped in the powerful winds, and like the branch of a tree, looked like it would plummet any minute, unless engineers could figure out how to snatch it out of thin air and pull it back. On the ground, New Yorkers and tourists gawked and pointed their cameras up; others hustled across the Circle, eager to reach their next destination. On this night at least, it seemed that mid-Manhattan was one player – the lucky one  – in A Tale of Two Cities.

You could understand, then, why the title of the keynote speaker’s speech struck me as ironic – “Facing Up To Our Global Challenges in a Volatile, Uncertain World.” The speaker, Jorma Illila, the chairman of Royal Dutch Shell and the former chairman and president of Nokia, delivered a thoughtful speech on what business needs to do and can do to restore trust, confidence and optimism. I thought I would share parts of that speech with you.

Stephen Bernhut


Jorma Illila

“It is important to acknowledge that the way we are dealing with our regional and global problems generally is failing.  We seem increasingly ill equipped to deal with change and the big issues of our day.

In the past, there was effectively a “triangle of trust” between government, business and civil society, which helped us tackle the great issues.  Today that triangle of trust is broken.

The quality of interactions within the triangle has been steadily declining for years, and it is time we come to terms with that fact.

For the future challenges the world faces are complicated and global in scope.  They cross borders.  They potentially affect all of us. They will require far more collaboration between government, business and civil society – not less.

For example, how will we transition to a more sustainable energy system while meeting growing demand?  How will we reduce CO₂ emissions to avoid the worst effects of climate change? How will we avoid overstressing our resource systems – including water, energy and food – as we add another 2 billion people to our population by mid-century?

New Approaches

New approaches are needed.  We need to find ways to get past the political and economic paralysis that is thwarting progress.

Some even argue that in a more turbulent world we need to lower our expectation for continuous economic growth.  They say it is unrealistic to expect ongoing economic growth, because productivity growth could very likely decelerate over the next century.

I’m not sure I buy that.  But change and volatility do tend to cause us to question many of our assumptions, which is good. 

Amid all this pessimism, I do believe there is reason for optimism.

It is important to remember this:  We are facing some of these issues only because of the unprecedented progress the world has made through globalizing the economy over the past few decades – progress that has seen an estimated 2 billion more people rise into the middle class.

In addition, the democratization of information and communication technology, such as the rapid spread of the mobile phone, is changing lives on a global scale – especially in developing countries.

So how do we deal with this new environment? How do we begin to mitigate the increasing stresses this progress is generating, while still growing the global economy?  And how do we build a global movement for change so we can actually make progress?

In a volatile world, there’s a greater need to develop “resiliency” into our systems.  By that, I mean the capacity of business, economic, political and social structures to adapt and grow in the face of change and volatility.

Businesses and governments that excel in the future will do a better job developing options to deal with unanticipated crises: From political upheavals to natural disasters to technological change.

To address the trust issue, we need to be more transparent in how we operate.  The need for business to listen is far greater today.  We also need to do a better job of explaining what we do and why. 

I also believe business needs to take a larger role in exploring new forms of partnership and collaboration, with governments, with interest groups and NGOs, and with businesses outside our own industries.

There are several reasons why this makes sense.  First, government agencies and elected officials are constrained by their jurisdictional boundaries and short election cycles. 

Second, industry generally has a longer-term view and a more international perspective and reach.  In energy, for example, we often make large investments that can span over 30 or 40 years.

Third, each business and industry tends to have a limited focus on its role within the overall economic value chain.  So partnership and collaboration among businesses is also essential.

This mismatch in boundaries and time frames between industry and government inhibits progress in responding to change and dealing with our long-term challenges.  The regulatory capability of the public sector also could benefit from the private sector’s technology, innovations and project skills.

So it makes sense to develop more effective ways to bring these parties together, to create new forms of collaboration that is integrated and influential.

Again, there is reason for optimism.  Some work already is under way to create new forms of collaboration that could restore the triangle of trust. 

One final thought I’d like to add:  If we are going to meet our future global challenges, leaders in both business and government will need to develop certain critical traits. 

The old ways of doing business and governing are unlikely to get us where we need to go.  In this new era, leaders need to be humble enough to want to see through the eyes of others, and understand what drives them. 

They need to be wise enough to recognize their success depends on accommodating the interests of others.  They need to be far-sighted enough to distinguish trends and real disruptions from everyday volatility.  And they need to be resilient enough to tackle the inevitable challenges of a turbulent world.

My guess is those who succeed in this regard will likely be the subjects of award-winning business books in the future.

In conclusion, we in business need to be willing to experiment more and accept that at times we will fail.  We need to accept that some ideas by themselves will not generate profits immediately.  And we may need to move forward on promising initiatives even without the proper policies and incentives in place.

There is a great opportunity for global business leaders to restore the trust necessary to address these global challenges.  It is also our responsibility to help address these issues, to help break through today’s gridlock so we can continue mankind’s long march toward greater prosperity.