Resilience is more important than profit today! An Interview with Mike Rosenberg, Professor, IESE Business School
What key strategic shifts should global companies prioritize to successfully navigate the challenges posed by geopolitical instability?
The most important issues are probably managing the markets on the one hand and global supply chains on the other. As many Polish companies felt firsthand, the war in Ukraine has made exports to Russia and other countries practically impossible. But war is not the only challenge to global markets. In his first weeks in office, Donald Trump has announced a series of tariffs and in some cases, this has been met with reprisals by other countries, such as China. Looking around the world, it is likely that there will be more such activity as we go forward.
A mirror image of this challenge can be found on the supply chain side with sourcing from some countries becoming more expensive or simply not possible. In the medium term, many companies are looking to source raw materials and semi-finished goods closer to home and/or from countries considered to be geopolitically stable.
How should businesses integrate sustainability into their core strategies while maintaining competitive advantage?
Sustainability is under attack at the political level in the United States and in other countries around the world. On top of that, in many markets it is difficult to get customers to pay more money for goods and services that are more sustainable. All of this makes the business case difficult at best.
The issue is that over the medium and long term, the world will undergo a transition to a low carbon economy. And it is likely that aspects of a company’s value proposition will have to become more sustainable, or the company will lose its license to operate within civil society.
The issue then becomes how to balance a medium to long term necessity with short term financial results.
You’ve written about the impact of climate change on business strategy. How can companies proactively prepare for disruptions caused by environmental shifts?
In my view, the path forward is to develop scenarios for the future based on the different levels of carbon emissions that the world may reduce to and the different impacts that we might see in weather patterns around the world, in Poland or in any other markets. The good news is that the Intergovernmental Panel on Climate Change and International Energy Agency publish such data. Each company then needs to work through it to see what it would mean for them.
One example I am aware of is the wine industry buying land in higher altitudes and latitudes to make sure that they will have an adequate supply of grapes as the climate slowly warms.
What role does cultural intelligence play in formulating effective global strategies?
Geopolitical tensions and extreme weather put stress on people at the personal and also the political level. Only a deep cultural understanding will help a company be resilient at the local level as these stresses add up.
As we witness a growing trend of deglobalization, how should multinational corporations adjust their strategic approaches?
People do talk about deglobalization, and this is clearly one of the scenarios that needs to be looked at. In some sectors, however, there has not yet been significant change in the trade numbers. This goes back to markets and supply chains, but the real question is “how fast should we move”?
What is your take on the role of emerging technologies like AI and big data in shaping corporate strategy?
For me the biggest impact of AI in the short term will be increasing white collar automation and allowing companies to do many things with a fraction of the people that were formally required. Customer contact centres, accounts receivable processing, software coding, and many other tasks will disappear or be enormously simplified. The companies which move too slowly will find themselves at a cost disadvantage. Another aspect to this, however, is that there will be less of a need to offshore a number of back-office functions and the volume of people required for them shrinks.
In the medium term, the application of these technologies has a potentially enormous impact on product development. We already see this in music, gaming, and movies in which the algorithms can predict which products will be the biggest hits. Again, go fast or maybe you will miss the next big thing.
How should businesses balance short-term profitability with long-term resilience in uncertain times?
I think that companies need to behave to some degree like families. Make sure that the balance sheet is strong and there is some financial slack to manage in uncertain times. For private companies this involves making sure that the owners of the company understand the risks and the importance of resilience. The challenge is the same for public companies although perhaps it is more difficult to convince the Board of Directors.
What lessons can companies learn from past crises, such as the financial crash of 2008, to better handle future disruptions?
There are two learnings that I can see from both that crisis, Covid 19, the war in Ukraine and any others you want to add. One is the importance of having a plan for managing a crisis and perhaps having had the good fortune to imagine what might happen using scenarios.
The other is to have a clear sense of purpose. What we saw at IESE Business School, is that those companies with a very sharp definition of their purpose have been better able to weather all kinds of storms and crises than those without such a North Star to guide them.
How do you view the role of executive education in equipping leaders for the challenges of the 21st century?
In our programs we spend considerable time and energy to help leaders and future leaders wrap their heads around the most critical global trends and begin thinking in systematic and non-linear ways. Again, scenario planning is a key element in this.
What trends in global strategy do you foresee dominating the business landscape in the next decade?
While every company is unique and the different trends impact industries differently, the most important trend is to add resilience in the equation and in some cases to make it more important than cost.
Companies have gone too far in maximizing profit at the expense of medium term resilience and I think this is the biggest overall trend.
Mike Rosenberg is a Professor of the Practice of Management at IESE Business School, where he has been teaching Strategy for more than 20 years. Professor Rosenberg has published books on Sustainability, Geopolitics, and Career Management in Turbulent Times. At IESE he lectures on these topics in the school’s MBA Program and is also involved in its executive education activities, where he works with Sr. Managers to help them understand these and other global trends and develop scenarios for the future. Professor Rosenberg has a PhD. from Cranfield University and also spent 15 years as a Management Consultant for Heidrick & Struggles, A.T. Kearney, and Arthur. D. Little.
Last Updated on March 3, 2025 by Anastazja Lach