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A renowned Chinese philosopher once said, “If you do not change direction, you might end up where you are heading.” This timeless wisdom highlights the fundamental challenge facing multinational corporations (MNCs) today. In a world reshaped by demographic shifts, geopolitical turbulence, regulatory volatility, climate change, rapid technological innovation and economic uncertainty, sticking to the current path may be the most dangerous strategy of all.
Organizations that fail to proactively reassess their direction risk finding themselves in markets that have moved on, with business models that no longer create value and cost structures that are too burdensome to fix. In an age where competitive advantage erodes quickly, leaders must embrace deliberate innovation and course correction early—before the consequences of inaction become irreversible or prohibitively expensive.
Making Sense of the Global Disruption
The global population demands abundant energy, a clean environment, food security and access to clean drinking water. Ongoing regulatory changes and rapid technological advances make it more challenging for CEOs and boards to develop resilient, long-term strategies. Deglobalization, friendshoring and onshoring have disrupted once-stable supply chains, leaving companies unsure of how to navigate a world that seems to be accelerating toward structural change.
MNCs are fiercely competing for resources to develop the next breakthrough technologies that generate sustainable value for their stakeholders. Meanwhile, governments are implementing policies that swing between extremes—tariffs, immigration restrictions, export controls and intellectual property disputes. The growing decoupling between the United States and the rest of the global economy adds to the complexity of planning and executing long-term strategies for leaders.
The political, economic, social and technological landscape of the next decade will demand that leaders think and act differently. Innovation will be fundamental, but leaders must also play a long game—investing in capabilities that match their strengths, influencing regulations that shape their industries, and directing capital toward sectors that create sustainable value.
Based on our personal experiences and discussions with other global leaders, the key macro trends that are central to creating a winning formula for MNCs are demographics, geopolitics and deglobalization.
The Changing Demographics of the World
The global population, currently around 8 billion, is expected to reach 10 billion by 2100. This growth demands more food, energy, clean water and resources—yet demographic patterns vary widely. India, South Asia and Africa continue to grow, while China, Japan, Russia, South Korea and most of Europe face population decline. Some countries need population growth to sustain their economies, which influences immigration policies and how they attract global talent. Purchasing power among middle-class families varies widely across countries, affecting product pricing and market strategies. These shifts greatly affect consumer markets, healthcare requirements and the labor force. CEOs and boards must consider demographic trends in strategic planning—adjusting investments, reshaping workforce strategies and influencing public policy as needed.
Shifting Global Landscape—Geopolitics, Economy and Deglobalization
Stable political systems and governments of the past are facing disruption. Economic pressures and declining living standards have fueled populism and extreme policy ideas, from immigration bans to sudden regulatory shifts. When countries play political war games, such as restrictions on rare-earth material exports from China or GPU chip sales from the United States, it causes ripple effects across global supply chains. Many companies are unprepared for these rapid changes, and the frequency of such shifts makes long-term planning more challenging.
Globalization is interconnected. Korea leads in electronics manufacturing; Taiwan is central to semiconductor production; and ASML in the Netherlands dominates lithography—together forming the backbone of the global electronics ecosystem. These interdependencies make abrupt deglobalization economically costly and operationally disruptive. The tentacles of globalization and supply chains are deeply embedded today, and political and business leaders must consider the implications before implementing knee-jerk policies and strategies.
Global debt levels are at historic highs, with the gross public debt-to-GDP ratio in advanced economies standing near 110 percent, approaching an all-time high, while average deficits are 4 percent of GDP. The full impact of the tariff is working its way through the economy. Inflation persists, and volatility in interest rates challenges access to capital. Equity markets remain resilient and at record highs, yet questions remain about whether major tech companies can recover the massive AI investments they have made.
Companies must incorporate geopolitical and economic uncertainty into all parts of their strategy and risk management and not ignore the macro dynamics.
Future-Proofing the Enterprise Through Innovation and Partnership
Companies and countries are betting on the future. China used to be the world’s factory, producing cheap goods. Today, Chinese companies are focusing on sectors vital for winning in the global economy and ensuring self-sufficiency, such as low-cost renewable energy, pharmaceuticals, electric vehicles, automation and AI. The Financial Times estimates that China’s R&D expenditure of $781 billion is now close to the United States’ $823 billion. In the same article, a German automotive executive says he moved his R&D efforts to China to shorten the innovation cycle from four years to less than one year, a partnership based on mutual advantage.
Western companies, especially in the U.S., continue to lead in AI, information technology, consumer goods and health sciences. The race to win in AI might not be solely about the technology itself; it could also involve the electrons needed to power data warehouses, smart algorithms and the talent required to manage the infrastructure. No one can predict which industries or technologies will dominate in the future, but the key is to choose the right sectors to invest in and align a company’s resources to succeed in them.
Innovation and profitable growth go beyond new products or services—it involves leadership alignment, talent, capital allocation and public policy. As trillions of dollars pour into AI infrastructure, leaders must consider the human capital needed to support these investments and influence government policies affecting workforce development, education and immigration.
While predicting the future is challenging, leaders who can connect the dots in the marketplace, make smart capital decisions and collaborate with others to achieve results with minimal capital outlay will succeed in the chaos of change.
The Game Plan for CEOs and the Boards
Leading an MNC in today’s environment requires the ability to navigate a highly complex and dynamic marketplace. Organizations cannot fully control geopolitical forces or regulatory shifts, but effective leaders understand that success depends on a multidisciplinary, lattice-like approach to strategy and execution. Sometimes, this feels like reading tea leaves to make strategic decisions.
Business leaders are exhausted by the multitude of changes in the marketplace—what worked yesterday no longer works today, and they are uncertain whether it will work in the future. Based on our experience managing and operating businesses in both developed and developing economies, we have identified leadership imperatives that help companies build resilience, shape their operating environment and prepare for different scenarios.
1. Play the long game with a resilient and bold strategy.
CEOs and the board should dedicate time on their agenda to analyze and discuss the macro environment and its impact on strategy. Leaders and board members with deep industry knowledge are often best suited to understand how regulations affect competitiveness. Including industry experts and academics for an outside-in perspective on macro dynamics and seeking input from shareholders enriches the strategic conversation.
“At Rohm and Haas, it became clear early in my tenure that the company needed to pivot to keep pace with a rapidly changing market. We acted boldly—divesting non-performing assets, acquiring technologies that positioned us for growth, and strengthening the leadership team. The trust and transparency built with the board and across the organization were essential in enabling these decisive actions.” – Raj Gupta
Scenario planning to evaluate how regulations and policies impact the core strategy is essential for discovering options. Strong boards ask for multiple scenarios that include regulatory, supply-chain, and geopolitical disruptions; they also make sure management recognizes triggers, timelines and possible responses. Gathering expert opinions and input from regional leaders within the organization helps tie together geopolitical considerations and avoids gaps in understanding.
Strategy is not set in stone, and if the CEO and board need to change course due to macroeconomic shifts, sunset legacy programs or rebalance the investment thesis, the organization must be nimble enough to adapt. Organizations that cannot adapt due to rigid structures, culture or governance will fall behind. When facing overwhelming, rapidly changing macro dynamics, the CEO and board should consider bold strategies. An incremental approach to changes may not deliver the value or competitive advantage that investors seek. At the end of this article, there is a case study on how Raj Gupta created value at Rohm and Haas through bold moves and inclusive leadership.
2. Build a robust risk management process.
The most significant risk for an enterprise is underestimating the timing, scale or convergence of potential disruptions. Many companies perform an annual Enterprise Risk Management (ERM) process, but they need to go beyond operational risk and consider structural and strategic risks as well. In our previous article, Governance to Growth, we highlighted three types of risk to consider: preventable risk, strategy risk and external risk. This process is effective only when it is tightly integrated into the company’s strategic plans and not treated as just a compliance exercise. Ultimately, there is a risk in launching a bold strategic move. When mistakes happen, high-performing teams learn from them, address them and pivot toward the next opportunity.
“At Tyco, I led a regional business in the Middle East following a major transformational acquisition. The deal involved every imaginable risk—safety, compliance, manufacturing, supply chain and talent. We had a solid mitigation plan from day one, yet new risks continued to surface. With strong engagement from functional leaders and transparent communication, we managed each issue. Board members visited the region to ensure proper execution. Risks are expected; what matters is how leaders assess them, plan for them, and mitigate them with rigor.” – Ramesh Nuggihalli
For example, at Tyco, a company we both worked for, ERM was a rigorous annual board review focused on tangible, measurable risks. Business leaders were expected to present risk mitigation action plans, timing expectations and capital needs. The ERM process should extend beyond traditional operational and financial risks to include geopolitical risks, demographics, technology disruptions, supply chain risks, regulation and ultimately, talent shortages and workforce issues. Companies that regularly update their risk profile and incorporate mitigation strategies into strategic planning will outperform their competitors. A disciplined ERM process will improve alignment between management and the board and promote a culture of resilience to address both near-term and long-term risks.
3. Compete through continuous reinvention.
Capital allocation is the CEO’s main responsibility and the board’s most influential tool for shaping the company’s long-term success alongside the management team. Investment priorities should cover not only short-term financial goals but also address the structural changes unfolding across the industry. Boards need to ensure that investment plans focus on sustainable competitive advantages and anticipate disruptions to products, technologies and business models.
Reinvention involves more than launching new products—it includes developing new business models, adopting new technologies, reconfiguring the supply chain, entering adjacent markets and pruning legacy operations that no longer add value. Successful companies commit to reinvention, a model that continuously differentiates their offerings from competitors.
Given the pace and scale of global changes and the fact that talent and resources are spread across the world, partnerships are often the most effective way to drive innovation and growth. Partnerships can take many forms—such as forming alliances and co-investing with new technology partners or regional players, partnering with supply-chain vendors and collaborating with academia and government to influence emerging regulations. Cross-border collaboration and partnerships are not signs of weakness; they increase speed, scale and financial leverage. Nvidia’s quick adaptation to regulatory restrictions in China—through redesigned products—demonstrates how bold and creative collaboration with the government can help maintain competitiveness even in turbulent conditions.
4. Diverse leadership promotes innovation and better decision-making.
When diversity is broadly defined to include industry, functional, global and current-generation experience, the team is better positioned to challenge assumptions, promote intellectual debate and make well-informed decisions. Diversity solely for the sake of diversity does not add value—we must ensure that board members and executive leaders actively participate in discussions and challenge assumptions appropriately, bringing their diverse experiences to the table.
The culture and team dynamics at the executive and board levels should promote open, intellectual dissent to ensure ideas are thoroughly debated before implementation. High-performing leadership teams use structured intellectual debate as a strength. They welcome dissent, rigorously pressure-test ideas and encourage transparent dialogue between management and the board. When executed effectively, this creates a culture of constructive tension that strengthens the quality of decision-making.
In a world where macro forces are reshaping industries, companies cannot rely on narrow leadership profiles. They need individuals who have operated across continents, navigated crises, and built businesses in volatile and uncertain environments.
5. Choose the right CEO and act decisively when you do not have one.
Selecting a CEO is one of the most fundamental duties of a board. Establishing clear selection criteria, casting a wider net to attract candidates and involving the right people in the interview process help ensure the right choice.
The CEO requirements should reflect the organization’s leadership style, culture, risk posture and strategic journey over the years. In today’s environment, the ideal CEO is an enterprise-level thinker with global awareness, digitally fluent, understands generational cultural shifts and has the courage to make tough, often unpopular decisions. With the average CEO tenure now under eight years, mistakes happen—but boards must act decisively when leadership fails to align with the company’s long-term goals.
“You need a CEO who is curious and challenges the status quo, someone who is open-minded, listens to and engages with the board, communicates candidly and doesn’t feel like they already have all the answers. Complacency, insecurity and arrogance can really limit the success of companies—and individuals.” – Raj Gupta
Private equity firms are much more decisive when selecting their CEO. In one case, the author recalls a PE firm replacing three CEOs in under three years. The third CEO implemented dramatic, impactful changes that resulted in substantial value creation for shareholders and ultimately led to a successful public listing with a market cap of $17 billion.
Selecting a new CEO is only the beginning. The board must ensure disciplined onboarding, conduct annual performance reviews linked to strategic priorities rather than financial results alone, maintain a succession pipeline and actively monitor early signs of leadership turnover, cultural decline or loss of strategic direction. These responsibilities are essential for effective board governance.
Winning in a World of Constant Changes
It is a cliché to say the world is changing—but it truly is, and it is changing rapidly before our eyes, with significant implications for MNCs. To quote Ernest Hemingway, the world of economics and geopolitics shifts “gradually and then suddenly.” Anticipating political and geopolitical instability, demographic shifts, technological disruptions and economic challenges—and preparing the enterprise to deal with these issues, which start slowly but can suddenly impact the organization—demonstrates strong leadership.
To succeed in this environment, CEOs and boards must first recognize that macro changes are here and will impact the organizations they lead. Second, they must adopt a long-term, forward-looking approach that integrates innovation, a bold strategy, regulatory engagement and diversity in the leadership team. Finally, the leadership team needs to build trust and transparency with stakeholders.
These are multi-pronged approaches to tackling many challenges that may all occur simultaneously. Companies that understand macro forces and align their capital, talent, and capabilities accordingly will outlast and outperform their competitors. Success depends on foresight, adaptability and the courage to make bold decisions before changes become too costly or irreversible.
Case Study: Rohm & Haas—A Bold Strategic Pivot Through “Shrink to Grow” and Risk Management.
When Raj Gupta assumed the role of CEO of Rohm & Haas in 1998, he brought operational discipline and extensive international experience from his tenure in Europe and Asia. His early assessment of the enterprise revealed several challenges: a portfolio weighted toward commoditized businesses, intensifying competitive pressure from Asian players, limited product differentiation, exposure to cyclical markets and deteriorating financial performance. Although no CEO prefers to shrink a company, divestitures became central to the long-term growth thesis. Shrinking to grow was not a retreat; it was a strategic reset.
Raj’s first recognition was that the external environment was shifting rapidly and that the company needed to pivot decisively toward higher-growth, less cyclical segments. Over a six-month strategic review, he and his leadership team developed a holistic transformation agenda: divest non-performing commodity assets, accelerate entry into high-growth electronics and advanced materials markets, and strengthen the leadership bench to execute against competitive and operational demands.
From the fall of 1998 to the spring of 1999, the company completed three acquisitions totaling approximately $6 billion, while divesting close to $1 billion of businesses. The employee base expanded from roughly 10,000 to 25,000, and the manufacturing footprint grew from 35 plants to more than 100. Shortly thereafter, the dot-com bubble burst, leaving the company with approximately $4 billion in debt and significant macroeconomic headwinds.
What ultimately helped was the trust and transparent partnership between the CEO, the board and other key stakeholders. The board had approved the bold strategy with full conviction and had confidence in both the leadership team and the transformational roadmap. That alignment enabled the company to withstand the downturn, maintain strategic continuity and recover over the subsequent three years. In 2009, Raj navigated the successful sale of the business to Dow Chemical with an enterprise value of $18.8 billion[1].
Key lessons learned from this experience:
Selecting the Right CEO. The board appointed Raj with clear intent: The business required a leader with broad industry depth, global experience and the courage to pursue bold, non-incremental moves to drive long-term value creation.
Trust and Transparency. Raj cultivated a highly transparent and trusting relationship with the board, enabling constructive challenge, rapid alignment and strong support during the most difficult phases of the downturn.
Bold Strategy Over Incrementalism. In a rapidly shifting industry, incremental moves would not deliver a competitive advantage. The leadership team adopted an outside-in perspective, grounding strategy in macro dynamics and committing to transformational action.
Focus and Resource Allocation Discipline. Capital and talent are always constrained. Raj and his team were explicit about where the company would invest, where it would compete and—critically—where it would not.
Strengthening Leadership Bench. Large-scale transformations demand leadership with the capacity to handle such ambition. Raj invested early in upgrading the leadership team, ensuring the organization had the capability and resilience to execute through volatility.
Board Alignment. The board’s support for the transformation plans enabled management to act decisively amid extreme uncertainty. Strong governance alignment accelerates execution and anchors organizations during disruption.
[1] Rohm and Hass’s former CEO on pulling off a sweet deal in a down market. Harvard Business Review. November 2010.
