Leadership in uncertain times

Last month we hosted an event in partnership with HSBC as part of the Meraki Leadership Series focused on “Leadership in Uncertain Times”.

Sir Donald Brydon, Chairman of Sage Group, formerly Chairman of the London Stock Exchange and Dr Frederic Neumann, Co-Head Economist at HSBC, discussed a number of the many pressing geo-economic issues. Isabel Wong, Anchor and business journalist from HKIBC moderated this valuable discussion.

We were joined by over 50 business leaders from various industries to discuss wide ranging issues such as the US – China trade war, the impact of Brexit and the potential for a next worldwide recession. The current pace of change and general uncertainty that we face, calls for decisiveness on the part of leaders.

Discussion highlights:

US – China trade war

The perception that China is struggling is misrepresented in the media. 97% of the country’s GDP is generated from activities other than exports. Exports from China are up 5%, not to the US but to other markets. We are unlikely to see a resolution to the trade war before the US elections.

Brexit

Sir Donald Brydon predicted at a previous Meraki HSBC Leadership Series event that the negotiations would be down to the wire and it would appear that this scenario is playing out. There is a huge amount to negotiate including all new trade deals – the UK has its work cut out, therefore there is not much clarity to be expected for the next couple of years ahead.

Global slowdown

We are seeing a synchronised global slowdown which will play out over the next 3-6 months. However the global economy is vulnerable to policy disruptions which could potentially stumble the world into recession. In many jurisdictions around the work the legislative process is stuck in a deadlock, therefore investment in infrastructure, health and education are all struggling as a result.

Private sector debt is generally very high, therefore there is limited headroom for public sector debt. If borrowing were to be used effectively, by investing in areas of infrastructure and education for example that would be highly beneficial to the global economy.

Hong Kong is obviously facing big challenges currently and China’s decisions impact the entire APAC region.

How to lead during these uncertain times:

• Obviously it depends on a company by company, industry by industry basis, but now is the time for companies to face the complex, big questions. Leaders need to have better and stronger risk analysis and audit practices that explore black swan events.

• Geopolitical tensions affect different regulations, therefore multinational companies need to be playing by more than one set of rules (HQ and local market).

• The need to keep the workforce optimistic is paramount. Leaders need to be empowered to make rapid and appropriate decisions in the face of complexity and change.

• People are more politically motivated and tensions are spilling into work life. Employee engagement is essential at this time and companies need to work even harder on their efforts to cultivate inclusive corporate cultures.

Reasons to be positive:

• Advances in technology for the benefit of industries such as healthcare.

• The impressive advances some countries are making in terms of environmental reform. For example in Rwanda, upon entering the airport visitors are welcomed to the ‘no plastic environment’ with a reusable bag.

• Europe and the Western world certainly face challenges, whereas the Asia region in particular has huge opportunities ahead. As highlighted we are not yet even scratching the surface in terms of possible trade integration across Asia.

In these complex times, where we are facing shocks to the system at every turn, business leaders need to be ahead of the game in terms of their audit practices. They need to lead with decisive and positive action. Although there are plenty of reasons to be cautious, there are still many opportunities to explore and with technology as a key driver, companies need to continue looking to the long-term horizon and investing in strategic initiatives to set them up for future success. By standing still we only go backwards.

We look forward to seeing you at our next event. For more information on our event series please contact the team.

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