GIFT Paper 1, Thomas Tang: Challenges of a changing world
Thomas Tang paints a vivid picture of how the rapid changes in the world today are throwing up such challenges that require new thinking -- and a new kind of organisation: the Global Institute For Tomorrow.

Introduction
We live in a complex and exciting world in which, despite the constant challenges of trying to bring harmony to a world that is often out of balance, huge progress has been made on many fronts. Developments in Asia over the last twenty-five years bear testimony to that dichotomy of progress intermingled with chaos.

Governments and business are constantly searching for new ways to cope with the demands of a world in flux, where standing still is not an option. These pressures arise at the local, regional and global level. However, in an interconnected world, few events of consequence enjoy the luxury of isolation and it is becoming widely acknowledged as well as understood that decisions taken in one part of the world can profoundly affect developments in another. These may be the decisions taken by Governments, multinational corporations or even by small groups of people, and it is this which increasingly defines the globalisation debate.

In this paper we raise the challenges faced by decision makers in corporations, governments and civil society.

The Challenges Faced by Corporate Decision Makers
Globalisation undoubtedly opens up numerous benefits to all the actors who are in one way or the other touched by its relentless march across the world stage. For global corporations, it provides access to consumers, low overhead costs, and ease of doing business in countries where investment is much needed. Governments too seek benefits for their people arising from the opportunity to attract global investments and enhance trade opportunities.

In Asia, the last twenty-five years have been one of dramatic developments with peaks and troughs. The region has witnessed profound developments ranging from the emergence of China as a global economic powerhouse, India’s leading role in the global IT industry, the shifts in Japan’s dominance in the world economy, to massive changes in the social and cultural landscape of the region. In addition the region has witnessed the impact of all of these developments on poverty levels (as populations increase), the burden on the natural environment, quality of life issues and major changes in the political arena.

Whilst there has been a desire to retain many so- called “Asian Values”, many of the ideas on political ideology, business practices and even social norms have been influenced by the mature economies and societies in Europe, the US and elsewhere as a result of globalisation.

For corporations there is a darker side to this issue. Corporations can have significant impacts on economies and societies, some of which can be negative. Criticism directed at corporations ranges from lack of cultural sensitivity to accusations of exploitation. It is easy to see why:

• Many global corporations do not have or are unable to retain the knowledge and insights of how to deal with the numerous, often complex, issues in the country of investment choice;
• Successful CEOs have often risen in their careers in environments that are very different to the ones encountered today or from the world they have to manage in the future. In addition many have never had the first-hand experience of dealing with changing attitudes and evolving economies;
• High profile scandals involving leading corporations have exposed systemic failures and lack of proper governance. There are concerns that even the guardians of the system such as the CEOs, CFOs, accountants, lawyers and financial institutions have failed to exhibit the levels of integrity that are essential to safeguard the interests of shareholders and stakeholders; and
• In an increasingly interconnected world, the growing perception driven by easy access to information, is that the gap between the “haves” and the “have-nots” is growing. This has created resentment in many quarters and political systems are often unable to manage these tensions thus resulting in unstable social conditions; and
• The elite within governments and local business have often failed to adequately address these issues and are thus seen as the allies of global corporations. They are together then viewed as ignoring the concerns of those living on the margins. Governments and local businesses have at times been found to pursue self-interests, thereby displaying inappropriate leadership behaviour.

The challenges to decision makers are thus related to the question of how to manage in a world that they have not been exposed to and which continues to evolve in a furious but unpredictable way. In order to do so, decision makers are being forced to question and re-examine past practices. These range from the systems of governance that they need to build to avoid repeating the mistakes of the past, leadership behaviour, ethical codes, flexible business strategies, risk management, protection of brand value through reputation and performance, and even issues to do with transparency of their business operations.

Governments are also still learning
As pervasive multinational cultures and business practices have a major influence in transforming societies, there is an almost constant need for local government as well as business leaders to have their radar switched on to read early warning signals and to uphold civic values.

The public sector in Asia has also faced criticism in its handling of globalisation issues and dealings with multinationals, especially in relation to their interaction with local constituencies. Many governments have experimented with, and are still trying, different political models ranging from socialist idealism to post-colonial populist political systems to try and fulfil their mandates. All of these invariably seek a way of harnessing global market forces whilst trying to maintain a status quo of economic performance and stable societies.

National governments who partner corporations are also ill-equipped to provide them with a helping hand to earn the legitimate ‘licence to operate’ in these countries. This is a licence that often sets expectations that can go beyond the existing legal framework. The result is that there is an atmosphere of mistrust between investors and shareholders, between communities and governments, and between the public and corporations. This is at times even projected as a rejection of western models of modernity, which is unfortunate.

It is therefore clear that many governments do not have the experience, knowledge or insights of how to deal with the numerous, sometimes complex, social-political issues arising in their respective countries confronted with corporate extremes linked with investment choice. The diversity of political systems, socio-economic conditions and cultural values in Asia makes this all the more challenging for both members of the public and private sector.

The Rise of Civil Society
The slow but encouraging rise of civil society institutions in Asia has heightened the awareness of the public with regard to the social and political dimensions of globalisation. However these institutions of civil society are often not well supported and have little access to the corridors of power, such that there cannot be useful and productive exchange of ideas and concerns. Hence, little is heard from these unheard voices and even less is channelled to the right levels of authority for constructive engagement.

With inadequate dialogue and feelings of isolation, many issues that could be addressed through the building of strong partnerships and trust are left unattended. This creates social tensions that in the long run do not allow for the evolution of the appropriate conditions for balanced economic development and social progress. These issues have led to heated calls by many (not just activists) for a re-think of how globalisation can to be controlled through the necessary regulatory controls, the implementation of stringent corporate standards and instilling transparent and open governance within the public sector.

There are many credible but unheard voices emanating from a growing list of civil society institutions within various societies in numerous Asian countries. There is a need for these to be heeded. They require access to decision makers and international media, and can provide the information as well as the knowledge to help decision makers. But the reality is that they currently do not have the channels to break through. By tapping into this source of information and knowledge, the benefits to decision makers would be one of having early access to their ” future markets and future customers”. These invaluable insights will allow them to adapt their management strategies, corporate behaviour and business practices accordingly.

Nonetheless, the swelling tide of awareness driven by civil societies in many Asian economies highlights the importance of this emerging force and shows how dictatorships and strong arm tactics are unsustainable in all respects.

Conclusions
Business leaders are often not equipped to manage in a changing environment due to the fact that “they lack exposure to the world that they are supposed to be managing”. The training and education of decision makers requires new learning aligned to equipping them with the skill sets and experience to deal confidently with the exciting possibilities of the unknown markets and customers of the future.

It is a fact that in today’s world with its increasing demands for transparency and relentless media scrutiny the majority of corporations do not deliberately set out to unfairly exploit their positions as global entities. Many strive to have stringent governance protocols, robust social and ethical policies and even independent audits on these issues. But the reality is that, as they expand and begin to operate in increasingly different and remote places, their capabilities and institutional mechanisms are not only stretched to cope but they also lack the experience.

At the same time, the pressures of performance can encourage bad behaviour especially when leadership is weak and when the internal checks and balances are undermined or not uniformly applied across the global operations. These threats to reputation are further exacerbated when local traits in emerging markets can range from over-eagerness to please to cynical and often unreasonable demands for royalties and incentives from investing corporations. This behaviour has serious consequences for all parties and over the long term dilutes the full benefits of development including holding back the formation of strong civil society institutions.

However, there are real challenges of how to develop appropriate governance systems to manage behaviour and, through that, institute new methods of “corporate learning. The demands of a rapidly changing globalised world impose a fundamental leadership challenge that corporations and governments need to confront urgently. These include improved governance and ethical behaviour. Only in this way can they build trusting partnerships that strengthen their positions within communities and markets.

“Conflict among various sectors of society there will always be. The challenge is how to mediate it in such a way that the energies of all can be channelled towards building better nations and a better world; and mediate it primarily by ensuring that those without employment and in the lowest rungs of industry are not relegated to grinding poverty in the midst of plenty.”
Nelson Mandela (1996)