On the Crossroads: Koen De Leus sees change as opportunity

As part of the webinar “Navigating Geopolitical Risks and Opportunities – Integrating Geopolitics into Corporate Decision-Making: Not a Threat, but a Strategic Compass”, hosted by Sandra Gobert, Executive Director of GUBERNA, Tom Burin, Barney Jordaan and Koen De Leus shared their views on how organisations can respond to a rapidly shifting global landscape.

Their insights showed how geopolitics is no longer an external factor but one of the key drivers for boardroom decision-making.

Read below the contribution of Koen De Leus, who sees structural change not as disruption but as a strategic lever to rethink business fundamentals and secure long-term relevance.

Koen De Leus, Chief Economist at BNP Paribas Fortis, shares his insights for Board Members: how to use uncertainty to strengthen the company.

Watch out for emerging trends

While observing the increased volatility around, we could identify five structural changes:

The consensus about the global order is not there anymore.

The turmoil we all are experiencing questions the world order that has been established after the World War Two. The international institutions, such as World Trade Organization, World Health Organization, NATO, World Bank, have served as a special feature of that order, and are currently losing their role and relevance.

US and China fight for global hegemony.

In the meanwhile, the world is getting more regionalised. New local poles of power are emerging, provoking more conflicts at regional level. Instead of the unipolar world of the last decades, we have moved into a multipolar world. This means more friction.

New developments, such as climate change, add pressures on business and increase overall ambiguity.

As any novelty, some developments challenge our habits and established routines. They push us to re-consider the basic assumptions we have about making business. We need to challenge our strategy, to review our business model, to re-think our value chain, etc.

Pure economic phenomena could be added to the list:

Accumulated public debt increases its pressure on economies and companies through interest rate shocks.

Population ageing imposes additional costs on business.

Fewer talents on the market imply growing costs of HR together with the increasing intensity of the war for talents. Companies have to hedge their HR strategies to be ready for this coming change.

Review how trends impact your company

Why is this important? By identifying emerging trends, we could better prepare to meet their impacts. Such developments have to be expected and pro-actively anticipated, as they threat with various disruptions. Boards need new people with general expertise on structural changes: the people who can question Executive Committee about company’s readiness for these changes. Consider supply chain as an example. During the pandemic companies have found out how vulnerable they were, how dependent on effective supply from their oversea partners.

The intention then was to regionalise and diversify supply chain, however after the pandemic, business as usual has been at best complemented by inventories’ increase. This is not enough. It is a reaction to the situation, not a solution. The idea is to make business more resilient to external shocks by identifying these shocks early on.

Ensure reliable and diverse information

Adequate sources of information about all these risks are essential: the board has to be aware of the upcoming changes to proactively lead the company through them. A good place to start with is the yearly Risk Report of the World Economic Forum, which gives an overview of current global risk landscape. It includes risks that are often ignored. For example, have you ever thought of how disinformation or misinformation could affect your company?

Country-specific risks are essential too. Belgium is one of the countries with the highest risks of water stress. That seems counterintuitive, but it is true. Is your company ready for a long period of drought?

Search for emerging opportunities

Europe needs more innovation: comparing the 25 largest US companies with the 25 largest European, we notice that half of the US companies were created after 1970s. None of the European companies have been created after that date. That tells you something about the lack of creative destruction and the innovation potential in Europe. It raises concerns: are we able to bring our ideas into successful business models? No. This, however, is indispensable if we wish to remain relevant in the global interconnected world with its accelerating speed of innovation.

One of the most powerful tools at Europe’s disposal is its single market. A Belgian company still develops rather for Belgium, and not for the EU. To innovate more, we need scale, and thus we need to fully use the opportunities of the united Europe. The Draghi Report serves a brilliant source of inspiration. It calls for reducing regulation, and ensuring that the single market is accessible throughout the EU to let national companies scale up and operate easily at the continent’s level. We should not forget that Belgium is part of Europe, an attractive and actively evolving market.

Embrace change

Boards have to be prepared to changing circumstances and diverse risks: if a place changes, if events change, you have to change as well. Boards need to change the way they perceive the reality: active use of scenario-planning and forward-looking approach have to become a part of routine in the rapidly changing environment. The unnoticed risks could cost too much, so we have to remain alert. Besides preparing a company to potential challenges, such deep monitoring of the environment opens new opportunities, as it pushes to think outside of the box and opens new perspectives.

Remember: every challenge brings an opportunity. Be ready for it!

Members of GUBERNA can rewatch the webinar below.