Lecture delivered at Sustainable Global Leadership Academy on 3 June 2020

1. Challenges in Sustainable
Leadership:
The Next Thirty Years
Prof. Dr. Johannes Meier

2. Thirty Years ago: German reunification
2Foto Andreas Krüger,

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. 4Source: https://www.genome.gov/27565109/the-cost-of-sequencing-a-human-genome/

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. 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
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7. The rising tide and justice?
Income and wealth distributions
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7

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

10. The risk of tipping points from climate change
10Source: PIK

11. The need to mitigate climate change
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12. 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

13. 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

14. Leadership implications
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1. Challenge orthodoxies
2. Understand risks
3. Aim for antifragility

15. Leadership implications
15
1. Challenge orthodoxies
2. Understand risks
3. Aim for antifragility

16. 1. Challenge orthodoxies
Source: Cambridge Dictionary
16

17. 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

18. Heuristics for the transition beyond neoliberalism
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Listen to diverse voices
Focus on common purpose and responsibility
Avoid polarization and look for new balances

19. Leadership implications
19
1. Challenge orthodoxies
2. Understand risks
3. Aim for antifragility

20. 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)
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21. Global risks are interconnected with non-linear impacts
21Source: http://reports.weforum.org/global-risks-2018/global-risks-landscape-2018/

22. 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

23. 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

24. Leadership implications
24
1. Challenge orthodoxies
2. Understand risks
3. Aim for antifragility

25. 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

26. Fragility – The concave
Example: Driving a car against an obstacle
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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

27. The concave nature of travel
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• 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

28. 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

29. 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)
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You are antifragile for a source of volatility if potential gains exceed potential losses
(and vice versa)

30. 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
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31. Thank you for your attention
johannes.meier@xigmbh.de
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