CHAPTER 8

Strategy: Reimagining Success

Thriving in a Broken World

CHAPTER 7 covered the value of local initiatives in addressing our urgent crises and presented them as a potentially more effective approach than global, national, or even multinational campaigns. That is chiefly because we believe that to deal quickly and effectively with the dilemmas confronting us, grassroots, entrepreneurial, public–private, targeted, and small- or medium-sized group innovation is essential and probably represents the majority of solutions. Out of singular breakthroughs—discrete campaigns that, for instance, reduce asymmetry by seeding economic opportunities in a small region; establish new institutions that directly attend the needs of the local populace and further the goals of the campaign; and implement technology that improves people’s lives—ecosystems and partnerships can emerge to replicate these successes in other places, scaling resources, knowledge, and ideas.

However, none of this is to deny the important responsibility of nations to help alter the disturbing path that we find ourselves on. Indeed, broad, national policies are essential to mitigate some of the most endemic and deep-seated aspects of the crises. These policies include tax regulations that more fairly balance contributions from the wealthy and the less well-off, or immigration rules that effectively navigate diverse views about outsiders within the country, or safeguards to protect people’s privacy from technological intrusion, or employment programs aimed at preparing the next generation of workers to take advantage of opportunities that artificial intelligence offers, rather than being defeated by it, or climate policy essential to diminishing the production of heat-gathering gases.

Only national governments have the reach and the wherewithal to deliver broad policy agendas for improving the lives of their citizens, which can then serve as springboards and support systems for local and entrepreneurial programs. Indeed, if nothing else, central governments should consider big policy initiatives to ensure their own survival: in nearly every country distrust of the ruling class is so elevated that national administrations cannot afford to delay proving that they can provide a political and social environment in which a better future for people within their borders can blossom.

Unfortunately, despite the important position that governing bodies could hold, most of the discussions at the national level around the world demonstrate that few are prepared for or capable of tackling the crises identified in this book. Attempts at finding solutions primarily lack will or imagination and are reflective of a fractured world, predicated upon outmoded notions from the last century—many of which ultimately were responsible for today’s global problems—and preoccupied with satisfying the gluttony of polarization instead of seeking a shared future. This is not an avenue to success; quite to the contrary, to navigate today’s difficult global landscape, every nation needs an explicit strategy for addressing the crises arising from ADAPT in a manner that creates a positive and all-embracing environment. Rather than view their achievements solely through a narrow metric—most prominently GDP, which is blind to the distinct economic and social conditions that individuals in a country live under—nations should also measure themselves by the quality of life and the social goods their residents enjoy and by how inclusive their society is, or, put another way, by how few people are left behind.

This strategy—focused on what we call interdependent, inclusive success—is generally absent from the international scene today. But it is available to all countries, including those that seem the least likely to adopt such an approach. Perhaps the best and most surprising example is the UK, which despite Brexit is in an extraordinary position to become an enabler of global interdependence in a fractured world in ways that buoy the prospects of all of its citizens at home. In fact, Brexit has left the UK with few strategic choices but to be such an enabler.

The UK has an opportunity to make a meaningful impact precisely because it is not among the four rule writers or geopolitical chieftains vying for spheres of influence that we wrote about in chapter 2—China, the European Union, Russia, and the United States. The world is fracturing at an accelerated pace and tensions and uncertainty surrounding the rule writers have veered off in so many unanticipated directions that many businesses have pressed the pause button before committing to future activities in these countries. For instance, PwC’s 2019 survey of global CEOs found that only 27 percent of respondents viewed the United States as a good investment alternative, down from 46 percent the year before; China fell to 24 percent from 33 percent.¹

To get a sense of the intrinsic features of a global enabler, and why the UK could be suited for that task, it is useful to look at postwar twentieth-century Singapore, which exemplified the vital role global enablers can play as well as the outsized success they can have at home. Sputtering and poor at the time of its separation from Britain and then Malaysia in the mid-1960s, Singapore was transformed under the leadership of Lee Kuan Yew into a hub for multinational companies (MNCs). Implementing policies that put the tiny island nation on a firm financial footing, including preventing the internationalization of the Singapore dollar, limiting the operations of foreign banks, and rooting out corruption in interactions between the public and private sector, Lee enticed some of the world’s largest companies to set up operations in Singapore. In the process, foreign investment exploded and global trade in and out of its ports ballooned.

While providing a haven for trade and multinational operations—serving as the grease for globalization, a place for MNCs to safely and profitably do business outside of their home markets—Lee and his government also focused inward on Singaporeans. As Singapore’s cashflow exploded, Lee’s administration sponsored rules requiring local banks to support industrial development and infrastructure projects that would provide jobs and jumpstart the local economy. Unemployment dropped from about 15 percent in 1960 to 2 percent now, a period in which per capita GDP rose nearly sixty times. Because of liberal immigration policies, Singapore’s population more than tripled in that time, providing a growing labor pool for manufacturing and technology-based businesses. In addition, tens of thousands of skilled workers are produced by Singapore’s top-ranked educational system, another outgrowth of Lee’s interior spending priorities.

Lee resigned as Singapore’s prime minister in 1990 (after thirty-one years) but stayed on in various advisory roles until his death in 2015. As much as his forward-looking policies altered Singapore’s less-than-stellar narrative arc, Lee’s leadership style was also indispensable. He embraced an approach that we call strategic executor (see chapter 12 for a deeper discussion on this and other leadership paradoxes). These are people who can articulate a strategy, understand the ways it may need to evolve to generate consistently positive results, and execute this strategy with both immediate needs and longer-term potentially shifting conditions in mind. This leadership tension is rooted in setting goals and continually measuring how closely they are met, while not being afraid or too proud to change direction if the metrics are wanting. Interviewed about his leadership tenets, Lee said: “Presented with a difficulty or major problem or an assessment of conflicting facts, I review what alternatives I have if my proposed solution doesn’t work. I choose a solution which offers a higher probability of success, but if it fails, I have some other way. Never a dead end.”²

Singapore’s success story aligned perfectly with a period of expanding globalization and internationalization of financial and economic networks; other places in the world thrived during that time in similar ways (for example, Dubai and Ireland). Although the global environment has changed quite a bit and the desired outcomes are different today, four characteristics that contributed most to Singapore’s emergence on the world stage are noteworthy (and still relevant): (1) an advantageous geographic position; (2) an excellent educational system—in particular, elite universities are crucial; (3) a strong rule of law, which translates into being a stable, pluralistic democracy and a safe place to do business; and (4) perhaps often overlooked, an inclusive society that welcomes outsiders and is guided by policies that are meant to improve the well-being and social status of all strata in every community. Inclusive countries command respect and trust around the world and are consequently perceived as attractive places to study, live, and navigate differences.

The modern successors to Singapore will need these and one other important attribute: considering the urgency to address intractable global dilemmas and the power wielded by the four rule writers, today’s enablers will have to be of a size that will make them already significant in the global economy, not so large as to be threatening but large enough to have a big impact.

The UK’s Opportunity

Although the decision to leave the European Union casts a shadow over any discussions about the UK these days, had the Brexit referendum never been held, many of the underlying economic and social challenges that the UK will face post-Brexit would still threaten the nation’s future. But they might have been papered over and neglected, as they have for many years. Indeed, Brexit represents such a potentially revolutionary shift in the UK’s prospects that by compelling its leaders and citizens to address the shortcomings of their country or chance drifting into irrelevance, Brexit may redound to the country’s benefit.

Among the most pressing issues bedeviling the UK is the wealth disparity between individuals (the top 10 percent of households control almost half of all Britain’s total wealth), between London and rural regions, and across generations. The UK’s manufacturing sector has shrunk faster than any other Western country—from about 17 percent of GDP in 1990 to 9 percent now. The UK’s technological innovation barely registers today, except in a few targeted areas such as materials science. The population is aging quickly, putting those three groups discussed in chapter 2 at risk: those about to retire with very little capital preserved and no, or limited, pension; those who are midcareer, have taken on sizable financial obligations, and are now threatened by technological disruption and economic loss even more so than before because of Brexit; and university students graduating without the right education and with overwhelming debt.

Yet even with these core problems, which are not dissimilar to challenges other developed Western countries are facing, the UK is well situated to be a central force in the world—an enabler to an inclusive rebirth of the global order that serves everyone, not only the most fortunate—and simultaneously improve the fraught conditions that many of its citizens endure. Viewing the UK through a different lens—one that focuses on how well Britain’s assets stack up against the characteristics needed by countries that would play an enabler role—a different picture emerges.

   Geographic position. The UK sits between two of the great powers—the European Union (EU) and the United States—which are experiencing increasing tension on a number of fronts, making the UK a natural choice for broker, buffer, and convener.

   Education. The UK’s university system is the envy of the world; five colleges are consistently ranked in the global top twenty-five and several others are in the running. Top UK schools have been synonymous with scholarly endeavor and academic achievement, not for decades but for centuries. This matters because the United States—the country that has traditionally benefited the most from attracting the best and brightest students from around the world—is increasingly less than welcoming to people who wish to emigrate for academic reasons.

   Rule of law. In spite of Brexit, the UK is seen as a relatively stable place, known for a strong justice system, a deep sense of morality and care in decision making—overall, a stable pluralistic democratic system. Because of this, London stands atop the world as a major center for finance and professional services. Post-Brexit, a more independent position might enhance London and the UK’s profile in this regard.

   Inclusiveness. In the UK, diversity is generally respected. Many people consider London their second home and view it as both comfortable and relatively safe. It continues to be a highly desirable destination for those seeking to emigrate in search of a better life.

On this point, last year I visited the London School of Economics (LSE). The entrance to the campus is a corridor that gives the sensation of walking through a narrow alley and, as a consequence, you cannot help but bump into a few people along the way. In fact, I literally bumped into a group of students (who I learned were from Bangladesh, Chile, China, Ethiopia, Saudi Arabia, and the United States) engaged in an energetic debate about what new forms global governance should take. Naturally, I joined the discussion, if for no other reason than it was a fascinating intellectual excursion through the issues covered in this book.

I asked the students why they were at LSE. To a person, their answer was, “Where else could you have this conversation?” What they implied in that question may not quite be true—I can think of campuses in the United States, other parts of Europe, and even India where these discussions could also occur—but their enthusiasm about LSE and the city was telling. After all, while these conversations may not be limited to London, the self-conscious sentiment that it is the only city where you will find them shows how attractive the UK is to the world’s brightest young people.

   Economic size. Although a relatively small nation, the UK has the fifth largest GDP in the world.

The UK’s advantages are a ray of hope in the midst of the country’s upheaval. If it chose to be an enabler—and use its opportunity to create a better nation post-Brexit both as a world citizen and as a home for all of its own people—a coordinated effort across six strategic areas would be required. These six areas are already in part touched by various UK policies, but they need to be shaped into a coherent and intentional whole. Below are our suggestions:

1. Target the world’s top talent to study and, in some cases, build businesses in the UK. To import the brightest people from around the world, the UK should actively promote itself as the place that welcomes the most intelligent students and support this initiative with path-to-citizenship and competition-based immigration policies that open the door wide for these students and allow the most capable to remain and build businesses after their education is over. To avoid additional tax burden on UK citizens for educating immigrants, these students should be charged the full tuition and ancillary fees, while privately funded scholarships could support top-of-the-pyramid students who cannot afford university costs. In considering this strategy, it is worth remembering that many Silicon Valley start-ups were built and are now staffed in large part by immigrants who initially came to the United States as students. In fact, the founders of twenty-one of America’s 91 billion-dollar start-up companies initially arrived in the United States as international students.³
2. Attract domestic and foreign capital to invest in innovation centers adjacent to UK universities. To build its own Silicon Valleys, the UK should actively support the connection between universities and nascent innovation hubs through grants and tax incentives, but also tout the advantages the country has to make the broader case to CEOs and investors that the UK is an advantageous place to invest in. To address regional economic disparities, a focus on developing these innovation hubs in locations outside of London (and not just Oxford and Cambridge) is essential. This strategy should target the decline in manufacturing by supporting Factory 4.0 industrial advances. Products made in the UK out of this program should have natural connections to the overseas home markets from which the founders of some of these innovation-based companies came as students.
3. Focus research and education around a few critical areas. The Silicon Valley ecosystem approach is founded on the idea that the educational curriculum (for instance, at Palo Alto’s Stanford University) is aligned with the industrial strategy that has evolved in the region’s innovation hub. In like manner, the UK should direct its research funding to certain topics of activity on which the country wants to build its global reputation. This is particularly important in the post-Brexit world, when EU funding will be eliminated. Ideally, the research areas would address major integrated problems that humanity faces today. They should include ADAPT-related issues like new global order in the area of deglobalization, materials science, medicine and healthcare, improving quality of life for the elderly, alternative energy, and soft capitalism (in which employees and customers share in a company’s success rather than just fuel it).
4. Place special emphasis on developing technology-savvy humanists. We purposely omitted one research area from the problems that the UK should focus on primarily because it is so overarching that it needs to be viewed as a separate, undiluted priority—to wit, humanizing technology or ensuring that technology such as artificial intelligence, robotics, social media, communications devices, and global networks serve people’s most pressing needs without threatening their well-being. To do this, the UK should formulate an explicit curricular strategy focused on developing talent in the most critical domains of technology, which also ensures that the students are taught to appreciate the unique characteristics of human systems and indeed of humanity itself. Done right, this strategy would enable UK universities to better prepare the country’s brightest students to navigate a future with technology playing an increasingly central role. As part of lifelong learning programs, this approach would develop an entrepreneurial class and professional talent able to build and design useful technology while mitigating its potential negative side effects—in other words, a technology that is inclusive in its benefits.
5. Negotiate free trade agreements with the critical players. Without the EU as an open trading partner, the UK has no choice but to develop relatively unencumbered trade agreements with major global players and increasingly influential regions—the United States, China, India, the Middle East, and critical parts of Africa. These trade discussions in emerging regions and countries should be viewed as an opportunity to craft explicit agreements intended to develop talent in, for instance, India, the Middle East, and Africa. These arrangements should be aimed at accelerating the growth of universities and educational competency in UK trading partners through cooperative programs with UK schools. This will create natural venues in which to market ideas, services, or products manufactured in the UK and serve as a vehicle for identifying and attracting the best talent to tap for future entrepreneurial and innovative ventures.
6. Make the UK a central node in a multinodal world. The UK should take advantage of its somewhat unique geopolitical position—that is, its proximity and long-standing relationship with the rest of Europe and its independence from it as well as its friendly relations with the United States—to establish itself as a relatively neutral place that world leaders and global thinktanks can meet to discuss and debate prevailing issues and seek agreement. By playing this role, the UK would further cement itself as a reliable and trustworthy financial and commercial center even during turbulent times.

Taken as a group, this “enabler” strategy points to a plethora of positive outcomes for the UK. Viewed from inside the country, this strategy sets up new educational standards and goals that will improve the preparation of graduates for the types of jobs that will be most valuable as the future unfolds. In addition, it helps determine what those jobs will be as it reduces the UK’s competitiveness gap in technology, reinvigorates the industrial and service economy base, and develops pathways for innovative companies to emerge out of new ideas. Through programs aimed at lifelong learning, it retools midcareer professionals displaced by automation for better jobs and overall raises professionalism and compensation of basic service workers and tradespeople. There are gains for retirees as well. This approach should create a significantly larger tax base from which to draw support for necessary public services. If an explicit focus for research is put on medicine and health, less expensive solutions for sustained healthcare should result.

There would also be consequential benefits to the rest of the world. With the decline of many postwar institutions and the shredding of old alliances, the world desperately needs a place to convene, leaving their weapons at the door, so to speak. Although a primary focus of this strategy is to bring a greater infusion of talent to the UK, some meaningful percentage of that talent will eventually return dividends to home countries—and perhaps encourage a spirit of shared mission and community. Perhaps most intriguingly, the UK would be crafting a new narrative for itself, badly needed in times when the country’s residents increasing feel like they are living in a country adrift without a shared story to bind it and thus have lost control over their own fate.

The Curious Tale of Dofasco

This chapter began by examining the weight of nations in a world that is fractured and that will increasingly have to turn to individuals and local initiatives for solutions to and activism against seemingly insoluble crises. But while looking at big global plans that nations can implement, it would be a mistake to not consider how this reflects on what corporations should and could do in a similarly large and inclusive fashion that protects and advances the well-being of all of their employees, the communities in which they operate, and the world. After all, each company has a huge influence on the quality of life of anywhere from a handful to hundreds of thousands of workers, from blue collar to executive, around the corner and around the world. They impact equally the communities that surround their factories, warehouses, and office spaces. How seriously companies approach their obligations to their workers, customers, partners, and environs—in similar manner to the way that nations advance their responsibilities to their citizens and their global partners—could determine their own short-term success and long-term relevance in the world.

Just as GDP is a poor metric for gauging the overall satisfaction, economic optimism, and prospects for the future of a nation’s residents and communities, shareholder value is an overly relied upon yardstick that is equally inadequate when measuring a corporation’s performance. Certainly, it is an apt benchmark for determining what shareholders get from their investments, but it is woefully agnostic about the equity of employee participation in the company as well as the impact of the organization on the surrounding communities, customers, suppliers, and the broader environment that it comes in contact with. In other words, shareholder value is indifferent to the elements of interdependence and inclusiveness that we believe are essential to a company’s success and to overcoming the worst ramifications of the crises. As with nations, few corporations today appear to be viewing their role through a sufficiently wide-angled lens.

In my memory, a company that convincingly demonstrated the significance and efficacy of a more interdependent and inclusive approach the last time the world faced a period of existential threats was Dofasco Steel, which I got to know well firsthand. Earlier in this book I shared that I was fortunate to have been born and raised in Hamilton, Ontario, when it was a thriving prosperous city. I was lucky that my father worked for Dofasco, at the time the second largest employer and contributor to the tax base in Hamilton. Dofasco was founded in 1912 by Canadian industrialist Clifton Sherman, who named the firm Dominion Foundries and Steel Company, later shortened to Dofasco. Spurred by the shift from iron to steel in railway construction, the company was tremendously profitable until the Great Depression in 1929, when the global market for manufactured products collapsed. Clifton, with his brother Frank, who had joined the business soon after it debuted, responded to the Depression with a set of actions that were unimaginable at the time—and to a large degree now as well.

Instead of pulling in the reins of the business and alienating its workers with steps that would harm its employees and essentially blame them for the downturn, Dofasco’s management instituted policies that treated the company as a single community and everyone working there from top to bottom as equal. They had a sense that this method of managing the business would pay off when economic conditions stabilized—and indeed these policies became core principles and emblemized the corporate culture in ways that would guide the firm for decades to come. Rather than laying off hundreds of workers, Dofasco reduced the workweek for everyone in the firm while trimming compensation for the most senior people and then using those savings to support the families of employees who couldn’t survive on a short week’s salary. On top of that, having seeded the notion that all Dofasco workers were fighting the same struggle together, the Shermans set up a suggestion process in which any employee’s idea for how to improve operations or customer service was taken seriously. And they put into place Canada’s first profit-sharing plan.

Over time other elements grew to support this inclusive culture, including the one I remember most fondly: the annual holiday party, which was held at one of the mills that was decked out for the festive season. In some years, nearly fifty thousand employees and their families would attend the party; every family was given a food package and every child left with a gift. Well before it was a common thing to do, Dofasco also set up programs to support jobs training, arts and cultural projects, and environmental protection in Hamilton as well as in the towns built around the iron ore mines the company owned in northern Canada.

This management approach was an extraordinary success. When the Depression lifted, particularly as the World War II industrial expansion took hold, Dofasco was in a privileged position with a sufficiently large, well-trained, and motivated workforce to meet the ballooning demand for steel. Its competitors were playing catch-up while Dofasco generated record profits, a track record that would continue through the 1980s. By then the third generation of the family had taken control and management had slipped out of the hands of the Shermans and into the technocratic arms of outside MBA-trained leaders who, through their education, gained a fondness for the importance of shareholder value. The company’s culture lost its progressive aura and in 1990, during a global recession, Dofasco was acquired in a hostile takeover by Luxembourg-based Arcelor, the world’s second largest steel producer, which itself was purchased by the No. 1 steel company (India’s Mittal) three months later. Today, Dofasco is a much smaller company that slips in and out of profitability—and no longer a beacon of enlightened and inclusive corporate management in Hamilton.

Some may consider Dofasco a quaint piece of the past, but actually the company’s history is extremely relevant today. Of course, there are obvious differences: many companies have a much broader footprint than Dofasco ever had and consequently the effect that organizations can have on their workers, partners, and the larger societies in which they operate is much greater. This in turn means that the harm that can result from an overly narrow view of success as well as the potential benefits of having a more interdependent, inclusive perception of success are significantly elevated. What is still remarkably applicable today from the Dofasco story is that shareholder gains need not be at odds with an inclusive “do more good than bad” strategy. In other words, particularly in times of crisis, interdependence and inclusiveness are perhaps the most valuable strategic markers.

This chapter illustrated how countries with the right characteristics could simultaneously reposition themselves to better navigate the world we now live in and improve the lives of their own citizens and the rest of the globe. We provided a window into how corporations should consider this strategy because their success too depends on operating strategies that benefit not just shareholders but all critical constituents.

Although we focused on the UK, a similar effort should be undertaken by every country: consider the challenges specific to that country, identify its strengths and weaknesses in being able to address those challenges, and develop a clear strategy for positioning itself for inclusive success for all of its citizens by effectively navigating its global interdependence. Although there is a clear need to motivate activism and devise solutions for global crises in entities and institutions both below and above the country level, nations are still the most meaningful political units in the world today.