I was interested to read an article from the Chairman of the American based National Intelligence Council a few weeks ago which I think is worth bringing to our readers attention
"Global Trends 2025: A Transformed World (http://www.dni.gov/nic/PDF_2025/2025_Global_Trends_Final_Report.pdf) " is the fourth unclassified report prepared by the National Intelligence Council (NIC) in recent years that takes a long-term view of the future. It offers a fresh look at how key global trends might develop over the next 15 years to influence world events. Our report is not meant to be an exercise in prediction or crystal ball-gazing. Mindful that there are many possible "futures," we offer a range of possibilities and potential discontinuities, as a way of opening our minds to developments we might otherwise miss.

Some of our preliminary assessments are highlighted below:

• The whole international system—as constructed following WWII—will be revolutionized. Not only will new players—Brazil, Russia, India and China— have a seat at the international high table, they will bring new stakes and rules of the game.  Maybe I’m biased – but I now tend to think of the BRICs as more of a ‘briC’, and I’m not really sure about the ‘r’ the traditional definition of a bric is rising affluence among larger populations in modernizing/industrializing nations, Russia probably fails on a couple of counts.

• The unprecedented transfer of wealth roughly from West to East now under way will continue for the foreseeable future. The point needs to be made that the transfer of wealth is far from undeserved. China is practicing the good Protestant virtues of hard work and thrift which underpinned the greatness of earlier empires...there is a degree to which we in the developed world have brought much upon ourselves.

• Unprecedented economic growth, coupled with 1.5 billion more people, will put pressure on resources—particularly energy, food, and water—raising the specter of scarcities emerging as demand outstrips supply. However we should be cautious about getting too Malthusian about this, there is plenty of extractable iron ore and copper in the earth’s crust, it is simply a matter of the price being at a level which makes the investment viable.

• The potential for conflict will increase owing partly to political turbulence in parts of the greater Middle East.  

From a Board perspective there are some clear implications for corporate strategy. In this ever-changing world of ours, at a time in history when change has implications beyond mere territorial boundaries to encompass the global scene, cultures, religions, contrasts between third world and first world countries, never has there been greater demand to bring wisdom (or intellectual property) to the role of Non Executive Director.  How is this “wisdom” (or IP) defined? Obviously years of experience in a particular industry or profession be it law, finance, mining, manufacturing etc. but the second IP that organisations are now starting to seek are those people who have strong geographic knowledge, contacts and language skills with other parts of the world.  For instance, clearly there is a demand for people with long term Chinese experience and long term Chinese contacts at a senior level. The same can be said for South America, Russia, India and Africa.

In some cases companies that are buying a particular IP will have to re-structure the board to provide balance with the IP associated with the corporate governance standards that are required of public companies.  This is a phenomenon that will only increase in complexity in the coming decade. (The other thing that Boards will need to adapt to and build skills for is the fact that the new Director brings views and ideas which are very new and challenging, and hard to listen to or act upon, openness to truly new ideas and issues will be a critical Board and senior management capability.)

I think the solution is for Chief Executives and Chairman to look more closely at the range of skills that they require for their organization in two to three year blocks because in today’s world three – five years is an awful long time.  The paucity of real Asia/China skills in Australian Executive Suites and Boardrooms should be of real concern.

John Murray - Group Managing Director

Swann Newsletter - December 2009