Forest and Trees, Etc.
The Great Panic of 1857 hit
London like a ton of bricks.
The previous decade had seen
a huge expansion in global
trade with the UK’s exports
doubling from 1848-1857.
And then it all came crashing down in a wave of bank
failures and bank runs.
The British Parliament created a committee, the Select
Committee on Commercial Distress, to find out just
what had gone wrong. In many respects it was a story
very familiar to modern ears: a toxic mix of real estate
speculation, securities and commodities bubbles, and
credit markets gone wild. It spanned Western Europe
to the Baltic Sea to China, with much of it pivoting in
London, the world’s financial capital.
Parliament and the Select Committee came under
tremendous popular pressure to do something, anything,
but they were confounded by the reality that so much of
the crisis’ root causes lay in California gold mines and
Swedish banks and Chinese fur pelt trading stations,
beyond Britain’s shores, out of Parliament’s reach.
We are in a similar situation today, where those who
bear the brunt of economic change are lashing out at a
system they see as unfair and “rigged” against them.
And at least in some respects, they’re not necessarily
wrong. The Economist reports that since 1990, almost a
billion people around the world have been lifted out of
poverty, but that’s small comfort to those in Detroit or
Manchester, UK from which simple manufacturing jobs
have fled. Populist anger is transforming politics in Europe and the US. People who feel marginalized by recent economic shifts want to reassert some level of control over their local economies; they want to re-impose
national and local controls on global economic trends as
they watch jobs and investments flow elsewhere. Populist outrage is a fact of life for businesses in 2017.
And consulting firms are on the front lines, both as
facilitators for greater global business models, as well as
an industry that is itself strenuously striving to become
increasingly global in both organization and delivery.
Globalization is not dead. Supply chains and distribution channels must be efficient and cost effective, capital
and resources must be deployed to companies’ strategic
benefit, global client needs must be met in a global way.
And neither will other forces shaping the business world
like the automation revolution go away because less adaptive regions are struggling with economic stagnation. But
the anger in these regions is real and is generating very
tangible consequences around the world for businesses.
It’s up to consulting firms, particularly those most scaled
to global production and delivery models, to help clients
balance the global with a more weighted and in-depth relationship with local communities. The issue of why some
regions are less economically adaptive is a political problem, but consultancies must help companies successfully
operate in those environments, with a local lens, being able
to move among trees while not losing sight of the forest.
Many firms have become experts in helping clients
address complicated local issues in remote places. What
is changing is that now consulting firms will have to
use those capabilities to continue to be global, but with
a greater emphasis on the local. Changes to regulations
may channel corporate strategies towards local options,
but companies will likely have to go further than the
regulations. The emphasis is shifting to the local—in the
US, in the UK, in Europe, everywhere. This is not just
political or regulatory but also a reputation and brand issue for clients, and for consulting firms themselves.
The challenge will now be to balance business needs
for competitiveness with a much greater sensitivity to
local concerns. Some of this will revolve around better
communications, and broadening the field of defined
stakeholders. But at least for the short term, it may
also mean possibly keeping jobs or assets local while
helping clients defray the opportunity cost. That is not
a permanent solution, but 2016 and 2017 are seeing a
revolt of the local against global forces, and consulting
firms can and should play an important role in helping
clients navigate the shifting political winds that could
prove a very disruptive force in 2017, indeed.
BY TOMEK JANKOWSKI
Tomek Jankowski is a Senior Analyst and Lead for Financial
Consulting Research, ALM Intelligence.