The end of the year is almost upon us and, with it, arrives the longstanding business ritual of analysts releasing projections for the next year. Often these are accompanied by sentiment trackers.
One from AlixPartners, a global consulting firm, made me blink. It surveyed some 3,000 business executives around the world about their experiences, concluding that around three-quarters are facing a high level of disruption from world events right now, while 70 per cent think their jobs are at risk. A remarkable 98 per cent believe their business models will have to change in the next three years.
It would be wrong to draw definitive lessons from one survey, least of all from one conducted by consultants whose job is to find problems to solve. Still, Alix’s message is not unique. A survey by Chief Executive magazine shows that, although a majority of business leaders expect to see better revenues over the next 12 months, and are fractionally more confident about this than they were last month, that same sense of “global and domestic uncertainty” pervades people’s thinking.
Indeed, when I talk to business leaders now, the words “disruption” and “uncertainty” repeatedly crop up. “As far as recent decades go, this sense of disorientation is new,” says Adam Tooze, a fellow FT columnist, who is also a history professor at Columbia University. In a recent column he revived an old buzzword, “polycrisis”, to capture the current sensation of multiple cascading shocks. This disruption is not the frothy creative destruction championed during the unicorn start-up era. This disruption is bad.
What explains all this fear? The world is reeling from shockwaves generated by, among other things, the war in Ukraine, the rise of artificial intelligence and the Covid-19 pandemic. The Alix survey shows that 88 per cent of respondents think they should reconfigure their supply chains to cope with deglobalisation, while a smaller majority of 56 per cent think that tech innovation is happening so fast that their company cannot keep up.
Beyond specific threats, I suspect another explanation is cognitive shock. Most business leaders today – along with anyone else from Gen X – built their careers in a world where it felt normal to expect a sense of stability and to be able to make long-term predictions. The late 20th century and early 21st century was a time when another buzz phrase became popular: the “Great Moderation”. That was the idea that inflation was low and growth so steady that the business cycle was almost dead.
It was also a time when the historian Francis Fukuyama published a tome heralding The End of History and the Last Man, and although Fukuyama has long since clarified that he did not really think “history” had stopped, the underlying idea that was absorbed by this generation was that history was inexorably going in one direction, becoming more democratic, more globalised and more capitalist. All of this was defined as “progress”.
Since 2008, however, we have witnessed the way history can also go into reverse: globalisation, free-market capitalism and democracy have all come under attack.
Meanwhile, the Great Moderation has been exposed as an illusion or, perhaps more accurately, a piece of financial engineering conjured up for a period by excessively loose credit conditions. Predicting the next 50 years no longer seems very rational.
Some would say this swing is just a case of the world returning to the historic norm. After all, most of humanity in most eras also faced instability and, often, violence. That it was the past few decades that were the aberration, not the other way round.
That’s of little comfort to individuals on the front lines of crises. Humans assume the conditions they grew up with are “normal” and everything else is not; I suspect that most of the survey participants might assume that soon we’ll probably return to the stability of the past.
Somehow I doubt it. The key point to remember is this: history shows that disruptions from war, or anything else, create not just terrible costs, but opportunities for some. Sony was born when the second world war smashed apart Japan’s formerly rigid society. America became dominant in global industrial production after Europe’s destruction. That word “disruption”, after all, comes from the Latin word “to break apart”.
Follow Gillian on Twitter @gilliantett and email her at gillian.tett@ft.com
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