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Wednesday, January 17, 2024
On Our Virtual Route 66 This Week: A Window Into The Future
We present the following snapshot of our World as we celebrate life in its' entirety:
It’s become a commonplace in business to say the pace of change is faster than ever. But what does that mean?
For the last five years, the data crunchers at Accenture have attempted to put some meat on those bones, with their latest effort out this morning.
They ingest more than 40 data series in order to measure change in six areas—technology, economics, talent, geopolitics, climate, and consumer & social. Their conclusion: the pace of change is indeed accelerating.
It has risen steadily since 2019, soaring 183% in the last four years, and 33% in the last year alone. Most of the 3,400 C-suite executives surveyed by the firm (88%) expect change to continue to accelerate in 2024.
What’s driving the change? Technology was the top driver of the six in 2023, after being in last place in 2022. You can credit that to the release of ChatGPT.
Talent fell from the top spot in 2022 to the number two spot in 2023. And geopolitics went from number two in 2022 to number five in 2023.
The report also confirms a point I made last week, that most companies are taking a cautious approach to generative AI.
Only 27% of C-suite executives said their organizations are ready to scale-up generative AI solutions, while 72% agreed with the statement: “The recent backlash on generative AI (e.g., policy issues, lack of accuracy, low initial ROI) will cause our organization to slow down planned investment in GenAI in 2024.”
You can read the full Accenture report here. And if you are wondering why CEO Daily seems so research-heavy this week, it’s because many companies are rushing out research in advance of next week’s World Economic Forum in Davos. Peter and I will both be there, and reporting back here.
The chief economist of the European Bank for Reconstruction and Development has a message for business leaders in the U.S. and Europe with protectionist measures and industrial policies on the rise: Be careful what you wish for.
Beata Javorcik doesn’t like restrictions to trade. The Yale-trained former World Bank economist is a rather conventional trade economist in that sense. So is her organization, the EBRD. But her observations are astute in this era of global AI and green tech competition. She reminded me this week that when the U.S. banned the export of advanced AI chips to China this fall, China responded in kind. It restricted Chinese exports of graphite to the U.S., adding to the bans of gallium and germanium exports Beijing had enacted in the summer.
China dominates the global production of all three elements, which are critical for the production of electric vehicles. Hence Javorcik’s warning.
“We looked at these critical raw materials, and the Western block controls relatively little of them,” Javorcik told me, recounting the findings of a recent EBRD study. “So geopolitical tensions and the threat of fragmentation of the global economy are not only costly and risky when it comes to economic growth, they also risk the success of the green transition.”
“If you look at all critical products, 30% are now under some sort of [trade] restriction. In 2015, it was 5%,” she said. It’s difficult to identify new suppliers on short notice. Developing new mines and refining capacity takes time, she noted, while export restrictions can have immediate effect.
The take-away for executives, she told me, is that “you need to talk about the dangers of economic fragmentation,” as their threat is real and bound to lead to further trade restrictions. In such an extended deglobalization scenario, she warned, no one is set to win.
Separately, the World Economic Forum kicks off next week in Davos, Switzerland. In WEF’s annual risk survey, out this morning, global executives highlighted “increased interstate conflict” among their top five short-term risks for 2024. In the critical election year 2024, “misinformation and disinformation,” and “societal polarization” also made the cut.
Climate-related risks, by contrast, have all but disappeared from the short-term outlook, although they still dominate the list of long-term risks. And also missing at Davos this year are DEI and ESG. Not a single session mentions either acronym, which confirms our—and the WSJ’s—analysis that the latter, at least, has become a “dirty word.”