Good morning from Geneva.
Fortune 500 CEOs, like many political leaders, have been taking a “geopolitical nap,” BCG managing director and global partner Nikolaus Lang told me this week. But with the return of war in Europe, and the resurgence of trade wars, they are finally waking up.
For strategy consultants such as BCG, that observation presents an opportunity. The Boston-based group launched its Center for Geopolitics this week, which Lang will chair.
“Most people who are in leadership positions today always operated in an environment where geopolitics didn’t play a role,” Lang said. “[Those] who are in their 40s or 50s today have not known inflation for 20 years, or conflict for 60 to 70 years. But in the past five years, [they] experienced a series of exogenous shocks they were simply not prepared for... It puts a lot of pressure on leaders.”
In response, the consulting firm has already developed a model to game out future trade and investment scenarios. It considers a dizzying 500 million data points across 5,000 commodities, 200 countries, and 10 input factors. “There’s a white space" between deep geopolitical expertise and decision making on matters like outsourcing and foreign direct investment that's usually determined by labor costs alone, Lang said.
The return of (geo)politics in business is one of three key strategic services that are most common at consulting firms these days. The other two are the green transition and the AI revolution. CEO Daily readers and consulting clients ignore them at their own risk.
On that note: Fortune and Meta organized a breakfast meeting on AI at the Cannes Lions conference this week, led by Fortune’s AI editor and author of Mastering AI, Jeremy Kahn. But the marketing crowd Jeremy met in Cannes has some waking up of their own to do, he wrote in Fortune’s Eye on AI newsletter:
“I couldn’t help thinking at Cannes this year that the ad industry has still not fully internalized the magnitude of the platform shift that is about to hit them,” Jeremy observed. “If AI chatbots and assistants become our primary means of accessing the internet, and of conducting e-commerce, how brands reach consumers is going to change profoundly.” At Cannes, he concluded, “the tide was turning. But it wasn’t clear those partying in the beach tents and on the yachts had noticed.”
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Peter Vanham
peter.vanham@fortune.com
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