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The Next Thirty Years

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The Next Thirty Years

  1. 1. Challenges in Sustainable Leadership: The Next Thirty Years Prof. Dr. Johannes Meier
  2. 2. Thirty Years ago: German reunification 2Foto Andreas Krüger,
  3. 3. 3 Three structural develop- ments in the next 30 years 1. The ambiguity of digitization and artificial intelligence 2. The pressure on societal cohesion 3. The need to mitigate climate change 3
  4. 4. 4Source:
  5. 5. The ambiguity of digitization and artificial intelligence Image by Gerd Altmann • AI becoming ubiquitous • Disruption of job concepts • Humanity on verge of a revolution in human reasoning, decision- making and relationships • Large risk to quality of human consciousness, learning and social interaction • Many entrepreneurial opportunities • Dependence on large platform providers / monopolies 5
  6. 6. The pressure on social cohesion • Large average income and wealth growth worldwide • Tremendous inequality • New set of divides (skills, metropolitan areas, cosmopolitan identities) • Populist resentment against technocratic elites • Growth dynamic exceeding policy makers’ ability to enforce rules • Major uncertainties from global pandemic Social cohesion Social inclusion Social mobility Social capital 6
  7. 7. The rising tide and justice? Income and wealth distributions 7 7
  8. 8. The sustainability illusion Consumption and footprint distributions 8 First World Rest of World 7,5 bn Consumption/Footprint x 32 per-capita average ~80% of total footprint Can the planet support 7,5 bn people with the consumption patterns and footprint of the First World? X “We promise developing countries that, if they will only adopt good policies, like honest government and free market economies, they too can become like the First World today. That promise is utterly impossible, a cruel hoax.” Jared Diamond
  9. 9. The risk of tipping points from climate change 10Source: PIK
  10. 10. The need to mitigate climate change 11
  11. 11. Situation summary: The future is open, ambiguous, dialectical Fundamental trends Future space Age of Age of Large information and communication streams … of freedom and ideas … of confusion and propaganda … collective intelligence cooperative solutions … of individualism … of joint and civil engagement … of trivial pursuits Compression of time, distance and access … of global reach … of global disruptions Increasing access of poor nations and in parallel increasing asymmetries … of global well-being … of self-interest and protectionism Inadequate ethical and spiritual codes in the face of global risks … of higher awareness … of ideological battles Source : based on Ketan Patel „The Master Strategist: Power, Purpose and Principle“ 2005 Source: Ketan Patel, Master Strategist 12
  12. 12. 0 kg 1 kg 2 kg 3 kg 4 kg 5 kg 6 kg Jan Feb Mrz Apr Mai Jun Jul Aug Sep Okt Nov Dez Complication: Business as usual not a good option Weight Turkey Surprise!! Source: N. Taleb, The Black Swan 13
  13. 13. Leadership implications 14 1. Challenge orthodoxies 2. Understand risks 3. Aim for antifragility
  14. 14. Leadership implications 15 1. Challenge orthodoxies 2. Understand risks 3. Aim for antifragility
  15. 15. 1. Challenge orthodoxies Source: Cambridge Dictionary 16
  16. 16. Core beliefs of Neoliberalism • Society of rational individuals seeking to maximize their own utility (homo economicus) • Competition primary driver in human affairs • Success of a nation = ∑ individual’s utility (GDP) • Proper role of government: establish and protect free markets 17
  17. 17. Heuristics for the transition beyond neoliberalism 18 Listen to diverse voices Focus on common purpose and responsibility Avoid polarization and look for new balances
  18. 18. Leadership implications 19 1. Challenge orthodoxies 2. Understand risks 3. Aim for antifragility
  19. 19. 2. Understand different structures of risk • Manageable Risks vs. Unmanageable Risks (W. Nordhaus – 2018 Nobel laureate) • Problem of long tails and discounting of long-term uncertainty (N. N. Taleb) 20
  20. 20. Global risks are interconnected with non-linear impacts 21Source:
  21. 21. Don‘t ignore the Black Swan risk domain Interesting, normal life Black Swan Domain Classical management domain Insurance and Casino domain High exposure to rare, tail events Low exposure to rare, tail events Incomputable events Computable events „Robustification“ 22
  22. 22. The moral dimension of climate risk At what probability of getting hit by a car would you still let your child play in the street? Muhammad Yunus 2323
  23. 23. Leadership implications 24 1. Challenge orthodoxies 2. Understand risks 3. Aim for antifragility
  24. 24. Two essential types of nonlinearities The convex The concave For a given variation, more upside than downside For a given variation, more downside than upside 25
  25. 25. Fragility – The concave Example: Driving a car against an obstacle 26 Speed Harm The nature of fragility: • For the fragile, shocks bring higher harm as their intensity increases (up to a certain level) • For the fragile, the cumulative effect of small shocks is smaller than the single effect of an equivalent single large shock. • The more concave an exposure, the more harm from the unexpected, and disproportionately so. Concave or negative convex curve For a set deviation in a variable the concave loses more than it gains Reference: Taleb, Antifragility
  26. 26. The concave nature of travel 27 • A small disturbance in a congested traffic system can lead to major delays. • Systems like traffic rarely experience positive disturbances. • Buffers are important to avoid major failures. The average does not matter. Foto basykes
  27. 27. Antifragility – The convex Antifragility: Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Detecting antifragility: For the antifragile, shocks bring higher benefits as their intensity increases 28 Variable Gains Convex curve: For a set deviation in a variable the convex gains more than it loses Reference: Taleb, Antifragility
  28. 28. Solutions to antifragility • Simple test: If I have „nothing to lose“ then it is all gain and I am antifragile. • First step towards antifragility: Decrease downside, protect yourself from extreme harm (negative Black Swan) and let the upside (positive Black Swan) take care of itself • Recognize path dependence: No upside without survival • Solution to antifragility is combination of aggressiveness and paranoia • Solution takes form of a barbell (bimodal strategy) 29 You are antifragile for a source of volatility if potential gains exceed potential losses (and vice versa)
  29. 29. Factors affecting the fragile-antifragile balance Antifragility Fragility • Specialization • Departmentalization • Silo Thinking • Bureaucracy • Privatization of gains, socialization of risk • Numerical predictions • Overconfidence of experts • Success and fear of loss • Narrative knowledge • Curiosity • Interdisciplinarity • Systems Thinking • Entrepreneurialism • Skin in the game • Large libraries • Wisdom in decision-making • Mentally adjusting to „the worst“ • Optionality 30
  30. 30. Thank you for your attention 31