Globalization in business has introduced a variety of profound changes, and many of them are positive: lower barriers, freer trade, cheaper goods and higher standards of living for workers in developing nations. If you haven’t been paying close attention, you might be under the impression these developments are poised to continue indefinitely.
But in reality, we may be nearing the end of globalization in business as we currently conceive it.
Fundamental changes are creating a transition to a new, less centralized global model that features a wide mix of policies, beliefs, laws and ideas, all competing for prominence. This new multi-polar transition promises to radically shake-up how business and governmental leaders prepare for the coming decades.
Adapting to a Multi-Polar World
As nations develop at a faster place, global complexity naturally rises. Think of the relative simplicity of the 1980s—a world dominated by the practices and ideologies of two global hegemons, the United States and the Soviet Union. In the ensuing decades, economic globalization, the rise of the Internet and other factors colluded to make the world seem smaller and more closely connected than ever before. It also seemed freer and more open from a business perspective.
Now, however, we are seeing a shift that promises a degree of complexity we have never before experienced.According to research published by PwC Global, a majority of CEOs believe we are on the cusp of a multi-polar global model. Three out of four CEOs expect increasing trade regulation; more than eight out of 10 see “increasingly divergent” systems of liberties and laws. And 83 percent expect variation in the fundamental beliefs that hold societies together. These changes are expected to outweigh the factors that bind us more closely together, such as greater online connectivity.
A New Shift
Globalization in business as we know it may not be dead, yet it is certainly shifting in a new direction. Although some business leaders may express concern about friction and conflict arising from competing systems and models, it is important to recognize the opportunity this change presents. Tighter economic integration is possible even among diverging systems; connectivity remains on the upswing; and increasing atomization doesn’t preclude faster growth.
One thing is beyond dispute: Business leaders who get out in front of these trends will be in the best possible position to seize the opportunities that arise.