One of the big questions that business leaders have these days is whether we are heading towards a deglobalized world. Our research highlights that we still remain in a deeply connected world, but the fabric of that connection is changing towards more intangibles and knowledge-driven flows. Keeping this context in mind, leaders can explore three different types of actions.
The first action will be to play offense and take advantage of growing flows, and then identify more growth opportunities. For example, if you look at data flows, they’ve been growing at around 50 percent per year between 2010 and 2019. If you look at the flows of intellectual properties or services, it has been growing at around 5 to 6 percent per year, which is double the pace of the goods trade. So, can you take advantage of this trend and innovate your business model and keep growing? That’s one opportunity.
The second opportunity is to enhance resilience for your own business. And one challenge that we identified from our research was the risk associated with concentration. We analyzed about 6,000 globally traded products and found out that about 20 percent of the products in terms of quantity, and 10 percent in terms of value, are highly concentrated. This means fewer than three countries account for almost all global exports. So, how do you manage this concentration through diversification or substitution? Sometimes, building a long-term relationship with your core suppliers will be very critical.
The third opportunity is to enhance the resilience for the entire system beyond your own business. For example, by forming a public-private partnership, or even forming a coalition among other private sector partners. What we saw during COVID is a great example of those partnerships, in terms of dealing with very big challenges that we had collectively been facing.