Is “business as usual” as bad as it sounds?
Most CEOs in the Asia-Pacific think it’s worse. According to a recent PwC survey, 63 per cent believe their companies will no longer be viable in 10 years if they stayed on their current path. Only a radical mindset change will enable the business transformation they need.
What is causing the concern? Climate-related regulation and the rise of generative artificial intelligence (AI) are among the biggest risks. But there are other drivers too: geopolitical tensions, shifting trade corridors and worsening externalities.
Projections like the 29 million tonnes of plastic expected to go into the ocean each year by 2040 (or the 5g we each ingest every week on average) are firmly in public view. While not cited in the report, these affect consumer choice and eventually regulation.
Hong Kong CEOs are acutely aware of the fallout from the US-China rivalry, including supply chain disruptions and changing trade patterns. Many remain in denial of the risks from inequality and economic dislocation. Many fought the city’s plan, now shelved, to charge for waste disposal, denying the reality of finite landfills, in stark contrast with our more agile neighbours in Shenzhen.
If most agree that reinvention is needed, what are business leaders to do? The first step in recovery is to admit there is a problem. For CEOs, the mindset that accepts the need to make fundamental changes is non-negotiable. Overhauling the business can be daunting when confronting company politics.
The advice from a wise retired CEO we worked with was to expand the problem: make it everyone’s problem. Too often the tendency is to avoid, even paper over, the problem with slogans, attracting criticisms of “greenwashing” or “purpose washing”.
Intellectual humility means knowing what we don’t know and accepting our fallibility. Leaders need to know when change is afoot. In Europe, 67 per cent of consumers believe
ultra-processed foods contribute to obesity, diabetes and other lifestyle-related illnesses. It is a matter of time before a similar awareness reaches Hong Kong and other Asian markets. Are the leaders of Wellcome and ParknShop preparing for a future when unhealthy packaged food is no longer in demand?
Clinging onto bad ideas or outdated business models is never prudent. Truth is, we would be better off without many of the businesses that CEOs fear will not be viable. The externalised costs have become too extreme – too many chemicals in the soil, too many cars on the road, too much screen time – and cannot be solved by incremental tinkering.
Reinventing business requires learning, which takes commitment and curiosity. Hong Kong, like many modern societies, conspires against this. A survey last year found that over half of Hongkongers worked more than 45 hours a week, and 65 per cent said they must respond to work messages after hours. Excessive time focused on work deliverables leaves executives and their teams with tunnel vision and little time for reflection. Lack of thinking undermines the foundations for transformation.
Having facilitated executive leadership programmes for nearly 20 years, our team at the Global Institute For Tomorrow (GIFT) have observed that since the pandemic, leadership mindsets are in retrograde mode. World views are narrower. Conceptual thinking is weaker. Attention span, logical thinking and empathetic skills have atrophied. Generative AI will worsen this, even if it improves productivity by some measures.
Business reinvention requires outside-in perspectives. Traditional approaches like relying on brand-name business schools, while considered a safe option, often reinforce the problem. They fail to ask difficult questions, focused instead on keeping clients happy. Reputationally tarnished but resilient consulting firms too often provide cover for decision-makers who prefer quick fixes.
Fundamentally, companies need new capabilities, both individual and organisational. Hong Kong companies are poised to do more business with partners in the Middle East. Do they have employees who speak Arabic or know the difference between Sunni and Shia Islam? Gaining cultural fluency requires pushing beyond one’s comfort zone.
Countries like India and Bangladesh cannot be painted with broad strokes as dirty or dangerous. Indonesia and the Philippines do far more than export domestic helpers, which is too often the mindset of Hong Kong executives. These are the markets of the future.
Understanding local conditions is key to forging new supply chains, markets and partnerships. International executives we worked with on a healthcare project in West Papua, Indonesia, were quick to propose digital solutions like telemedicine apps, overlooking the constraints of connectivity infrastructure.
Hong Kong has ambitions to become an international health-tech innovation hub. To serve customers beyond regional economic centres like Hong Kong, Singapore or Bangkok, their leaders need more frontline exposure in the region, and to think outside the advanced-economy box.
Retooling companies will require experts in new disciplines – from carbon accounting to AI engineering – but also material scientists and specialists in non-Western governance systems. When we go to Cambodia this year to support the development of small and medium-sized enterprises, we know that the legacy models from financial capitalism might not be accepted by a rural society long exploited by those with more economic power. They may not even be applicable.
Hong Kong’s future depends on its business leaders to redesign their companies. Gone are the days of arbitraging a poor and rapidly growing mainland China. Government funding, public relations campaigns and international events will only go so far. The best time to start business reinvention was 10 years ago. The second-best time is now.
This article was originally published on South China Morning Post (SCMP).
