Connect with us

Markets

The New Rules of Leadership: 5 Forces Shaping Expectations of CEOs

Published

on

It’s common knowledge that CEOs assume a long list of roles and responsibilities.

But in today’s world, more and more people rely on them to go beyond their day-to-day responsibilities and advocate for broader social change. In fact, a number of external forces are changing how leaders are now expected to behave.

How can leaders juggle these evolving expectations while successfully leading their companies into the future?

The New Rules of Leadership

This infographic from bestselling author Vince Molinaro explores five drivers reshaping our world that leaders must pay attention to in order to bring about real change.

“the

How is the World Being Reshaped?

Leaders need to constantly stay one step ahead of the transformative forces that impact businesses on a broader scale.

Below we outline five key drivers that are changing what it means to be a leader in today’s world:

1. Transformative Technologies

Over the last number of decades, several technologies have emerged that could either accelerate the disruption of companies, or provide them with new opportunities for growth. According to KPMG, 72% of CEOs believe the next three years will be more critical for their industry than the previous 50 years.

For example, artificial intelligence (AI), can now provide companies with insights into what motivates their employees and how they can help them succeed. IBM’s AI predictive attrition program can even predict when employees are about to quit—saving them roughly $300 million in retention costs.

Leaders must accept that the future will be mediated by technology, and how they respond could determine whether or not their organization survives entirely.

2. Geopolitical Instability

Geopolitical risks—such as trade disputes or civil unrest—can have a catastrophic impact on a business’s bottom line, no matter its industry. Although 52% of CEOs believe the geopolitical landscape is having a significant impact on their companies, only a small portion say they have taken active steps to address these risks.

By being more sensitive to the world around them, leaders can anticipate and potentially mitigate these risks. Extensive research into geopolitical trends and leveraging the appropriate experts could support a geopolitical risk strategy, and alleviate some of the potential repercussions.

3. Revolutionizing the Working Environment

As the future of work looms, leaders are being presented with the opportunity to reimagine the inner workings of their company. But right now, they are fighting against a wide spectrum of predictions around what they should expect, with estimations surrounding the automation risk of jobs ranging from 5% to 61% as a prime example.

While physical, repetitive, or basic cognitive tasks carry a higher risk of automation, the critical work that remains will require human interaction, creativity, and judgment.

Leaders should avoid getting caught up in the hype regarding the future of work, and simply focus on helping their employees navigate the next decade.

By creating an inspiring work environment and investing in retraining and reskilling, leaders can nurture employee well-being and create a sense of connectedness and resilience in the workplace.

4. Delivering Diversity

Diversity and inclusion can serve as a path to engaging employees, and leaders are being asked to step up and deliver like never before. A staggering 77% of people feel that CEOs are responsible for leading change on important social issues like racial inequality.

But while delivering diversity, equity, and inclusion seems to be growing in importance, many companies are struggling to understand the weight of this issue.

An example of this is Noah’s Ark Paradox, which describes the belief that hiring “two of every kind” creates a diverse work environment. In reality, this creates a false sense of inclusion because the voices of these people may never actually be heard.

Modern day leaders must create a place of belonging where everyone—regardless of gender, race, sexual orientation, ability, or age—is listened to.

5. Repurposing Corporations

The drivers listed above ladder up to the fact that society is looking to businesses to help solve important issues, and leaders are the ones being held accountable.

With 84% of people expecting CEOs to inform conversations and policy debates on one or more pressing issues, from job automation to the impact of globalization, CEOs have the potential to transform their organization by galvanizing employees on the topics that matter to them.

For a long time, the purpose of corporations was purely to create value for shareholders. Now, leaders are obligated to follow a set of five commitments:

  1. Deliver value to customers
  2. Invest in employees
  3. Deal fairly and ethically with suppliers
  4. Support communities
  5. Generate long-term value for shareholders

Ultimately, these five commitments build currency for trust, which is critical for sustained growth and building a productive and satisfied workforce.

Lead the Future

If leaders understand the context they operate in, they can identify opportunities that could fuel their organization’s growth, or alternatively, help them pivot in the face of impending threats.

But organizations must invest in the development of their leaders so that they can see the bigger picture—and many are failing to do so.

By recognizing the new rules of leadership, CEOs and managers can successfully lead their organizations, and the world, into a new and uncertain future.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Comments

Markets

Which Asian Economies Have the Most Sustainable Trade Policies?

The Sustainable Trade Index ranks 19 Asian economies and the U.S. across three categories of trade sustainability.

Published

on

Which Asian Economies Have the Most Sustainable Trade Policies?

To say that Asia has benefited from international trade is an understatement. By opening its economies to the rest of the world, the region has become a leading exporter in many of today’s most important industries.

Trade has also improved Asia’s quality of life, lifting over one billion people out of poverty since 1990. Without the proper controls, however, such rapid growth could have harmful effects on Asia’s environment and society.

In this infographic from The Hinrich Foundation, we break down the results of their 2020 Sustainable Trade Index (STI). Since 2016, this index has ranked 19 Asian economies and the U.S. across three categories of trade sustainability: economic, social, and environmental.

What Exactly is Sustainable Trade?

International trade is an important source of economic growth, enabling domestic businesses to expand, reach new customers, and gain exposure to foreign markets.

At the same time, countries that focus too heavily on exports put themselves at greater long-term risk. For example, an aggressive expansion into manufacturing is likely to impair the quality of a country’s air, while overdependence on a single product or sector can create an economy that is susceptible to demand shocks.

“The primary principle which underpins sustainable trade is balance. Trade cannot be pursued solely for economic gains, without considering environmental and social outcomes.”
– Merle A. Hinrich

Thus, sustainable trade supports not only economic growth, but also environmental protection and strengthened social capital. It involves finding a balance between short-term incentives and long-term resilience.

Measuring Sustainable Trade

The Sustainable Trade Index (STI) is based on three underlying pillars of trade sustainability. Every economy in the STI receives a score between 0 and 100 for each pillar.

PillarNumber of IndicatorsExamples of Indicators
Economic pillar21
  • Use of trade tariffs
  • Logistics performance
  • Growth in labor force
Social pillar12
  • Level of economic inequality
  • Presence of child labor
  • Educational attainment
Environmental pillar14
  • Level of air pollution
  • Reliance on natural resources
  • Environmental standards

The economic pillar measures a country’s ability to to grow its economy through trade, while the social pillar measures a population’s tolerance for trade expansion, given the costs and benefits of economic growth.

Last but not least, the environmental pillar measures a country’s proficiency at managing climate-related risks. Individual pillar scores are then aggregated to arrive at an overall ranking, which also has a maximum possible score of 100.

The Sustainable Trade Index 2020: Overall Rankings

For the first time in the STI’s history, Japan and South Korea have tied for first place. Both countries have placed in the top five previously, but 2020 marks the first time for either to take the top spot.

RankEconomyOverall Score
1 (tied)🇯🇵 Japan75.1
1 (tied)🇰🇷 South Korea75.1
3🇸🇬 Singapore70.2
4🇭🇰 Hong Kong68.3
5🇹🇼 Taiwan67.0
6🇺🇸 U.S.66.2
7🇨🇳 China56.5
8🇵🇭 Philippines55.9
🌏 Average55.1
9🇹🇭 Thailand50.5
10🇱🇰 Sri Lanka50.4
11🇲🇾 Malaysia49.5
12🇧🇩 Bangladesh49.4
13🇧🇳 Brunei48.5
14🇰🇭 Cambodia47.8
15 (tied)🇮🇳 India46.9
15 (tied)🇻🇳 Vietnam46.9
17🇮🇩 Indonesia46.3
18🇱🇦 Laos46.1
19🇵🇰 Pakistan43.9
20🇲🇲 Myanmar40.3

Advanced economies like Singapore, Hong Kong, and Taiwan were also strong performers, each scoring in the high 60s. At the other end of the spectrum, developing countries such as India and Vietnam were tightly packed within the 40 to 50 range.

To learn more, here’s how each country performed in the three underlying pillars.

1. Economic Pillar Rankings

Hong Kong topped the economic pillar for the first time thanks to its low trade costs and well-developed financial sector. Financial services have increased their contribution to Hong Kong’s GDP from 13% in 2004 to 20% in 2018.

The region’s recently initiated national security law—which has resulted in greater political instability—may have a negative effect on future rankings.

RankEconomyEconomic Score
1🇭🇰 Hong Kong69.6
2🇸🇬 Singapore68.7
3🇨🇳 China64.9
4🇰🇷 South Korea63.3
5 (tied)🇲🇾 Malaysia61.2
5 (tied)🇺🇸 U.S.61.2
7🇹🇼 Taiwan60.3
8🇧🇳 Brunei59.3
9 (tied)🇯🇵 Japan58.6
9 (tied)🇵🇭 Philippines58.6
🌏 Average56.9
11🇧🇩 Bangladesh56.3
12🇰🇭 Cambodia56
13🇱🇰 Sri Lanka54.7
14🇻🇳 Vietnam53.9
15🇮🇩 Indonesia52.1
16🇮🇳 India51.4
17🇲🇲 Myanmar49.5
18🇹🇭 Thailand47.4
19🇵🇰 Pakistan46.9
20🇱🇦 Laos44.0 

China was also a strong performer, climbing to third for the first time. Asia’s largest economy benefits from a well-diversified group of trading partners, meaning it doesn’t rely too heavily on a single market.

The bottom five countries—India (16th), Myanmar (17th), Thailand (18th), Pakistan (19th) and Laos (20th)—suffered from issues such as payment risk, which is measured as the difficulty of getting money in and out of a country. This risk is especially damaging to trade because it discourages foreign direct investment.

2. Social Pillar Rankings

The social pillar features the highest average score, but also the largest gap from top to bottom. This gap has expanded over recent years, growing from 43.9 points in 2018 to 52.3 in 2020.

RankEconomySocial Score
1🇹🇼 Taiwan88
2🇯🇵 Japan87.3
3🇰🇷 South Korea86.9
4🇺🇸 U.S.83.1
5🇸🇬 Singapore63.1
6🇵🇭 Philippines62.4
7🇹🇭 Thailand60.9
🌏 Average59.1
8🇭🇰 Hong Kong57.8
9🇧🇩 Bangladesh55.8
10🇲🇾 Malaysia53.6
11🇱🇦 Laos53.0
12🇮🇳 India52.5
13🇮🇩 Indonesia52.4
14🇧🇳 Brunei51.6
15🇻🇳 Vietnam50.4
16🇨🇳 China50.2
17🇰🇭 Cambodia46.2
18🇱🇰 Sri Lanka46.1
19🇵🇰 Pakistan45.6
20🇲🇲 Myanmar35.7

Taiwan claimed the top spot for the second time, solidifying its reputation as Asia’s leader in human capital development. It performed well in the educational attainment indicator, with 93.6% of its population receiving a tertiary education.

China, despite its success in other pillars, only managed 16th. This was partly due to the effects of its now defunct one-child policy, which has been responsible for creating gender imbalances and a shrinking population.

3. Environmental Pillar Rankings

The environmental pillar has the lowest average score of the three. Japan, Singapore, Hong Kong, and South Korea were the only countries to score above 75.

RankEconomyEnvironmental Score
1🇯🇵 Japan80.0
2🇸🇬 Singapore78.7
3🇭🇰 Hong Kong77.4
4🇰🇷 South Korea75.2
5🇨🇳 China54.5
6🇺🇸 U.S.54.3
7🇹🇼 Taiwan52.8
8🇱🇰 Sri Lanka50.4
🌏 Average49.1
9🇵🇭 Philippines46.6
10🇹🇭 Thailand43.2
11🇰🇭 Cambodia41.2
12🇱🇦 Laos41.1
13🇵🇰 Pakistan39.3
14🇮🇳 India36.7
15🇻🇳 Vietnam36.3
16🇧🇩 Bangladesh36.0
17🇲🇲 Myanmar35.6
18🇧🇳 Brunei34.6
19🇮🇩 Indonesia34.3
20🇲🇾 Malaysia33.8

The top four performed well in areas such as air quality and water pollution, and with the exception of Hong Kong, have all introduced carbon pricing schemes in the past decade. This doesn’t mean these countries are without their flaws, however.

Land-constrained Singapore, for instance, ranked 16th in the deforestation indicator. The city-state is one of the densest population centers in the world, and has cut down forests to clear space for further settlement and urbanization.

Building Back Better From COVID-19

Despite the damage that COVID-19 has caused, there are some silver linings. This includes the environmental benefits experienced by China, where lockdowns reduced carbon emissions by 200 million tonnes in a single month. It’s been estimated that after two months, China’s reduced pollution levels saved the lives of 77,000 people.

These temporary improvements are an explicit reminder of the environmental and social costs associated with economic growth. In response, governments in Asia are taking steps to ensure the long-term sustainability of their nations. Japan and South Korea both announced their commitments to achieving carbon neutrality by 2050, while China set a similar goal for 2060.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading

Markets

Mapping the World’s Key Maritime Choke Points

Ocean shipping is the primary mode of international trade. This map identifies maritime choke points that pose a risk to this complex logistic network.

Published

on

maritime choke points

Mapping the World’s Key Maritime Choke Points

Maritime transport is an essential part of international trade—approximately 80% of global merchandise is shipped via sea.

Because of its importance, commercial shipping relies on strategic trade routes to move goods efficiently. These waterways are used by thousands of vessels a year—but it’s not always smooth sailing. In fact, there are certain points along these routes that pose a risk to the whole system.

Here’s a look at the world’s most vulnerable maritime bottlenecks—also known as choke points—as identified by GIS.

What’s a Choke Point?

Choke points are strategic, narrow passages that connect two larger areas to one another. When it comes to maritime trade, these are typically straits or canals that see high volumes of traffic because of their optimal location.

Despite their convenience, these vital points pose several risks:

  • Structural risks: As demonstrated in the recent Suez Canal blockage, ships can crash along the shore of a canal if the passage is too narrow, causing traffic jams that can last for days.
  • Geopolitical risks: Because of their high traffic, choke points are particularly vulnerable to blockades or deliberate disruptions during times of political unrest.

The type and degree of risk varies, depending on location. Here’s a look at some of the biggest threats, at eight of the world’s major choke points.

maritime choke point risks

Because of their high risk, alternatives for some of these key routes have been proposed in the past—for instance, in 2013 Nicaraguan Congress approved a $40 billion dollar project proposal to build a canal that was meant to rival the Panama Canal.

As of today, it has yet to materialize.

A Closer Look: Key Maritime Choke Points

Despite their vulnerabilities, these choke points remain critical waterways that facilitate international trade. Below, we dive into a few of the key areas to provide some context on just how important they are to global trade.

The Panama Canal

The Panama Canal is a lock-type canal that provides a shortcut for ships traveling between the Pacific and Atlantic oceans. Ships sailing between the east and west coasts of the U.S. save over 8,000 nautical miles by using the canal—which roughly shortens their trip by 21 days.

In 2019, 252 million long tons of goods were transported through the Panama Canal, which generated over $2.6 billion in tolls.

The Suez Canal

The Suez Canal is an Egyptian waterway that connects Europe to Asia. Without this route, ships would need to sail around Africa, which would add approximately seven days to their trips. In 2019, nearly 19,000 vessels, and 1 billion tons of cargo, traveled through the Suez Canal.

In an effort to mitigate risk, the Egyptian government embarked on a major expansion project for the canal back in 2015. But, given the recent blockage caused by a Taiwanese container ship, it’s clear that the waterway is still vulnerable to obstruction.

The Strait of Malacca

At its smallest point, the Strait of Malacca is approximately 1.5 nautical miles, making it one of the world’s narrowest choke points. Despite its size, it’s one of Asia’s most critical waterways, since it provides a critical connection between China, India, and Southeast Asia. This choke point creates a risky situation for the 130,000 or so ships that visit the Port of Singapore each year.

The area is also known to have problems with piracy—in 2019, there were 30 piracy incidents, according to private information group ReCAAP ISC.

The Strait of Hormuz

Controlled by Iran, the Strait of Hormuz links the Persian Gulf to the Gulf of Oman, ultimately draining into the Arabian Sea. It’s a primary vein for the world’s oil supply, transporting approximately 21 million barrels per day.

Historically, it’s also been a site of regional conflict. For instance, tankers and commercial ships were attacked in that area during the Iran-Iraq war in the 1980s.

The Bab el-Mandeb Strait

The Bab el-Mandeb Strait is another primary waterway for the world’s oil and natural gas. Nestled between Africa and the Middle East, the critical route connects the Mediterranean Sea (via the Suez Canal) to the Indian Ocean.

Like the Strait of Malacca, it’s well known as a high-risk area for pirate attacks. In May 2020, a UK chemical tanker was attacked off the coast of Yemen–the ninth pirate attack in the area that year.

Due to the strategic nature of the region, there is a strong military presence in nearby Djibouti, including China’s first ever foreign military base.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading

Subscribe

Join the 230,000+ subscribers who receive our daily email

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Popular