We need truly visionary leaders
Why the short-termism and lack of vision of transactional leaders can only take us so far.
Ambition has been replaced by opportunism. And vision by transaction. For a year in which over half of the world’s population went to the polls to elect their political leaders, one thing was surprisingly lacking from most campaign trails: visionary conversations about the future of our countries. We heard a lot of short-term tweak proposals and populist gifts to gain votes, but very little on how our countries can create long term success for their populations and businesses.
In our experience in driving transformation, a new conversation is needed, one that asks: what will build the long-term success of our economies? and how can we move beyond competing by looking to the past for how to compete, towards staying relevant in the current global race?
Answering these questions is tough. Here we only intend to take an initial stand and encourage productive additions and criticism.
The need for visionary leadership.
Leading with a clear, long-term, and holistic vision brings many benefits. It shows foresight and commitment while creating aspiration for voters about a future they can create jointly. It unlocks investments and action from businesses by reducing the uncertainty of long-term planning. To ensure it has broad-based support, such a vision should be shaped using a combination of top-down perspectives and the input and challenge of relevant stakeholders on the ground. Such collaboration is not about creating complete consensus, which inevitably leads to dilution of ambition and clarity, but rather to enrich the vision and ensure that it has limited blind spots. This will help make it compelling to a multitude of audiences.
The vision should outline how to create economic prosperity and social well-being while respecting planetary health.
Numerous current policy approaches, especially in the EU, are fundamentally business sceptical. They resort to bureaucracy and norms to drive action. This risks two things, diverting resources from innovation towards compliance; and encouraging a passive approach – doing the minimum necessary to meet requirements. Saying ‘businesses have not done enough so should be coerced’ is missing part of the picture, as they operate within a set of constraints and contradictory incentives. Putting in place policy frameworks – including for finance – that encourage profitable innovation that benefits society and the environment is key. For example, encouraging businesses to keep capital in the productive economy and invest it into R&D, while ensuring the conditions are met for their leaders to think long term, would be in our view more productive than asking for page after page of due diligence or reporting.
A clear and holistic vision helps move beyond short-sighted partisan conversations and encourage deeper and more meaningful debates about the future of a country. Politics are currently highly polarised, with many looking mostly at protecting their own interests, and pushing blame on those they see as enemies – often either ‘the migrants’ or ‘the rich’. One underlying trend is the lack of belief that our economies can create prosperity – a view supported by years of near economic stagnation in many European countries – leading to the perspective that one can only protect what one has or make claims on the perceived excesses of others. By shifting the conversation towards expanding the wealth generated by an economy, the vision can help move beyond discussions in which moderate politicians have gotten stuck, and demagogues have thrived.
Identifying a country’s pillars of industry excellence.
For the vision to be practical and executable, policymakers need to gain clarity and develop an educated opinion on the handful of sectors where their country can excel on a global scale – like creative industries, climatetech, or artificial intelligence. The selection criteria include national experience, existing resources and infrastructure, available intellectual capital, and geographical positioning. For this to work, the commitment to those sectors should be long term and unwavering. That means sectors should not be selected due to short term hype, but because of their potential to deliver outstanding long-term benefits. This is where collaborating with expert stakeholders across sectors is critical, to move beyond biases and impressions. Leaders have also to be realistic about the potential of a sector, and be ready, after a long period of guaranteed support, to shift focus should the investment case no longer be viable.
Once the sectors have been selected, investments need to be made to accelerate their trajectory – which may require short term budget imbalances, but for a productive purpose. To build and sustain competitive advantage over time, countries need to foster an ecosystem with higher education, centres of excellence, and targeted funding at the centre. That is where transformational leaders need to work hand in hand with experts to drive progress and remain ambitious while delivering very concrete progress.
Finally, there is no winning in isolation. The goal is for the selected industries to make a significant global contribution and to integrate into international networks. For this, governments should support their overseas promotion through a combination of trade agreements, bilateral cooperations, and strategic promotion to grow their chosen industries. To prevent potential abuses and the formation of bubbles – which often happens when there is oversized government support in specific areas – there should be clear oversight and monitoring so support and regulations can be adapted dynamically, while the overall commitment to the sectors remains consistent.
Managing the impact of the transition - especially for the most vulnerable.
Managing transitions is hard and asking for people to bear short-term costs in the name of uncertain future benefits has proven counterproductive. To create societal buy-in, while reinforcing the belief in the long-term benefits of the transformation, short term gains that illustrate what the future looks like – and that benefit the general population – need to be delivered. These can be unlocked through public procurement and public private partnerships that promote best practice, and can take the form of job creation or reduced living costs. For example, to highlight what a multimodal future for transportation may look like, Austria developed flat fee, go anywhere train tickets for its population. This helps move beyond punitive or restrictive approaches, which can lead to alienation from those who fear they will lose out in the transition.
Building a positive narrative that combines short-term gains with the long-term vision helps concretely outline its benefits, including widely available economic opportunities and better services. Reframing the narrative away from giving things up and banning things towards creating a better future – in line with a reframing of key aspirations, for example that new or bigger is always better – can help people shift from a feeling of having sacrifices imposed on them to one of having opportunities presented to them.
Since only some of the population will feel they directly benefited from the pillars of excellence, there is a risk of disenfranchising other groups. Well-crafted pillars should therefore create direct and indirect benefits and ripple effects by stimulating an entire ecosystem of industries – well beyond the core targeted ones – which will benefit a significant proportion of the population and create new aspirations for future generations. What matters to people is both their own economic prospects and that those of their children will be even better. Still, having the courage to acknowledge that not all will benefit the same way, and using a combination of measures, including redistribution, to mitigate the social costs of the transformation and prevent abandonment of the most vulnerable people and those employed in other sectors is critical.
Closing thoughts
Some might question the costs of this – but the bigger question is what are the costs of inaction? Laggard economies that struggle to compete on the global scene and become riddled with debt? Local companies struggling with ‘unanticipated’ market changes and demanding more protectionism that ends up hurting the wallets of families? Rather than propagating a mindset of trade wars and economic conflict, why not positively shape one’s country’s destiny?
To go further
This fantastic discussion paper from the Cambridge Institute of Sustainability Leadership on the role of policy for moving from ESG to competitive sustainability, complemented by two good articles from the Financial Times and Vogue Business.
This article (in French) covering a recent study by Ambrosetti on the cost of inaction and the risk of over bureaucratic policies.