by Klaus Schwab and Bob Sternfels*
- The global economy has shown remarkable resilience throughout the pandemic, but history shows that real recoveries depend on adaptability and decisive decision-taking.
- As many parts of the world look forward to the most acute parts of the Covid-19 pandemic subsiding, we must unify around a sustainable, inclusive growth agenda.
- With a prosperous future for life on the planet at stake, decisions and financial commitments made now will have a lasting impact on the global economic direction.
The global economy has demonstrated significant resilience through the pandemic, bouncing back faster than expected. Economic momentum remains strong, but nations and organizations are encountering cross-currents in supply-chains, workforce availability, and inflation.
The pandemic response comes in the context of a worsening climate crisis and rising economic inequality. These compound challenges remind us that crises can become watersheds of policy and strategy.
Indeed, the foundations of future growth are often laid as societies respond to the weaknesses crises expose. At this juncture, our recovery’s success is still not assured. History shows that in times of disruption, resilience depends on adaptability and decisiveness. Once the most acute period of the pandemic subsides, a resilience agenda will become the key to future prosperity.
The future is determined by decisions taken during crises
To build a better future, the emphasis must now shift from defensive measures and short-term goals to a sustainable, inclusive growth agenda. Growth is a precursor to economic development.
A sustainable inclusive growth agenda will focus on growth that supports the health and repair of the natural environment while improving the livelihood of wider population segments. We need to find pathways to a genuinely better society, so that our actions make our planet and our economies more resilient and secure.
But how can leaders meet this resilience challenge to achieve sustainable and inclusive growth? Getting there will depend on effectively and holistically addressing the conditions of our economies and societies and crucially, their interrelationships—climate, healthcare, labor needs, supply chains, digitization, finance, and inequality and economic development.
Three considerations for the path forward
1. Public- and private-sector leaders need to take a broad view of the resilience agenda
At the moment, labor shortages, the rise of the digital economy, supply-chain disruptions, inflation, and inequality are all addressed in isolation, with overly specialized solutions developed in organizational siloes. Such an approach does not adequately address interdependencies that exist between them, and the broader, longer-term trends driven by climate change, societal developments, and geopolitical dynamics.
One model response is the European Commission’s “Recovery Plan for Europe,” with its emphasis on the interdependencies between education, healthcare, housing, climate change, economic growth, competition, and jobs, and the need to address them in a holistic framework. The difficulties encountered in implementing such plans will be a measure of the distance we must travel to bring along everyone in society.
2. Strategies and structures have to be designed for flexibility and speed
We can assume disruption and accelerated change lie ahead. Nations and organizations must therefore approach issues with built-in adaptability and agility. Speed is important. The COVID-19 pandemic, and its ever-changing trajectory and impact, has shown that we need more timely information, up-to-date strategic agendas, and shorter decision cycles.
The initial approach to stopping the spread, aimed at eliminating the virus completely, is now being rethought. When circumstances change, so too must the response of business and government. To face uncertainty, our organizations have to be flexible and always learning.
These attributes will weigh more in our solutions than defensive economic buffers (the key answer in the financial crisis of 2007–08). The new stance allows us to respond to supply-chain discontinuities, technological leaps, and societal changes. More value is placed on anticipating disruptions and trends than in developing detailed budgets and plans.
3. Beyond building resilience in business and the economy, public and private leaders must also build societal resilience
Truly sustainable and inclusive growth solutions go beyond improving business and economic performance. They also contribute to the reparation and sustenance of the natural environment, enrich low-income countries, and truly improve the lives and livelihoods of historically marginalized population segments.
This understanding can be fully embraced in the purpose statements and actions of companies as well as public institutions. For companies, the adoption of environmental, social, and governance (ESG) standards and metrics can help optimize strategy for positive societal impact.
For governments, measures such as New Zealand’s Living Standards Framework takes a step in the right direction, valuing more than top-line GDP numbers as indicators of national wealth.
A common agenda requires effective public- and private sector cooperation
We can shape a common resilience agenda, but to do it we must urgently intensify the dialogue between the public and private sectors. Key decisions and financial commitments made now will determine our direction in the aftermath of the pandemic.
Our starting point is a consolidated view of the resilience themes. This will enable us to better understand the opportunities for sustainable and inclusive growth—for companies, countries, and societies.
We must strengthen our resilience muscles now. At stake is nothing less than a prosperous future for organized life on our planet.
*Founder and Executive Chairman, World Economic Forum and Global Managing Partner, McKinsey & Company
**first published in: www.weforum.org
By: N. Peter Kramer
