Technological advances and globalization have helped unleash innovation and bring people around the world together. Yet a more connected world also causes tensions — between nations, cultures and businesses.
This “new global context” is the theme of this week’s World Economic Forum in Davos. At a time when geo-economic conflict is seen as a top risk, the leaders coming together from across the private, public and nonprofit sectors will be grappling with how to reconcile the countervailing forces of disruption, competition and collaboration that define the globalized economy.
“The inherent tensions of national economies that compete with and depend on each other simultaneously are some of the foremost challenges that CEOs face when running a global enterprise,” says Douglas L. Peterson, president and CEO of McGraw Hill Financial Inc.
As head of the company that assesses financial risks across the globe, Peterson has a good understanding of the challenges facing the world economy. But he is also an optimist, professing faith in entrepreneurialism and innovation to help spark creative solutions.
In an interview, he discusses the challenges of world connectivity, an aging population and the yawning infrastructure gap, as well as the need to embrace disruption:
What issues are at the top of your agenda at Davos, gathering with some of the world’s top thinkers, policy makers and business leaders?
For the last 18 months, we have been working to help address the global infrastructure deficit so that remains a dialogue that we plan to participate in. As you know, WEF is devoting considerable resources to global infrastructure needs. We just released new research last week from our S&P Ratings analysts outlining the multiplier effects that infrastructure can have on the economy.
Beyond that, I am continuing conversations around the impact of a globally aging population. We are also starting to talk about how the world’s demographics will be affecting markets and the economy, including the different economic behavior of the Millennial generation.
Another topic that I think is not only underappreciated, but not fully understood, is the impact of globalization — “world connectivity.” The inherent tensions of national economies that compete with and depend on each other simultaneously are some of the foremost challenges that CEOs face when running a global enterprise.
This year’s theme is the “new global context,” with complexity and uncertainty threatening the era of economic integration and partnership. What key attributes do today’s business leaders need to navigate such an environment?
Great leaders ensure that there is a vision for the organization. Another important attribute is maintaining certain core values and instilling those in the culture of your organization. Integrity has to be part of one’s system of management. Another important attribute for leaders is accountability in an organization and clear definition of roles. Leaders must be good communicators both internally and externally — particularly about the vision, the values and culture, and the accountability.
Also, leaders must be aware of the benefits and pitfalls of an increasingly technology-driven global economy. It is more important than ever to get out of your office and see what’s happening in your company, in the communities you operate in, and with other decision makers around the globe.
You’ll be speaking on a panel about geo-economic competition and its impact on global growth and integration. Whether it’s the U.S., China or Russia, what should be the role of governments in fostering economic growth?
Governments and business are more intertwined than ever before. Physical things like financial markets and energy will continue to become more complex, not less. With that, inevitably, will come government regulation. That means the private business sector will have to have a good working relationship with their public sector counterparts, and viceversa, building on trust, education and transparency. It goes back to the principles of communication and respect.
You’ve spoken about the importance of closing the global infrastructure gap — for both emerging economies held back by bottlenecks and developed economies coping with crumbling roads and bridges. What’s the solution to funding those needs?
We need to implement policies and private-sector solutions that make infrastructure an investment destination for the private sector. McGraw Hill Financial, through S&P Capital IQ, has taken on some of these barriers and will be unveiling a prototype for some exciting innovation next month at an infrastructure conference hosted by Georgetown University. This will help give the marketplace and stakeholders more transparency, access to data and analytics, and a place to connect to a project pipeline. Our S&P Dow Jones Indices unit is creating infrastructure indices to provide investors benchmarks to measure their investment decisions. And our S&P Ratings business will devote more global resources to P3’s and the ratings of these projects.
How much faith do you have in entrepreneurial spirit and technological innovation to tackle some of the biggest global economic challenges — whether it involves infrastructure, health, or the environment?
Complete faith in both. These are perhaps two of America’s most significant assets, which set us apart as world leaders. But that means we must lead, not exclude. With the world interconnected like never before, it will be crucial to harness this for its potential — both human and economic — and implement the results effectively. Innovation is disruptive, and we must embrace that and grow outside of our comfort zone as leaders to compete globally.
Top image: Courtesy of Grigorev_Vladimir, iStock Editorial
Douglas L. Peterson is President and CEO of McGraw Hill Financial Inc.