Geopolitics first: Why executives need to focus on the world around them

A decade ago, strategy was all about “Mobile First,” as companies put the mobile experience, like the iPhone, at the center of their business operations. More recently, it has been “AI First,” as organisations embed artificial intelligence into everything they do and sell.

However, the most powerful force shaping the world right now, is neither mobile or AI. It is geopolitics.

Since the Ukraine war began, geopolitics has quickly escaped its old parameters, going beyond something to do with the Taliban or the crazy North Koreans. It is no longer just a stimulating topic to discuss over cocktails.

Everywhere a business looks, from stock price to supply chain, the face of geopolitics is present. And, it is not the same face that existed before, it is new and unfamiliar.

At one moment, it is the fallout of the Ukraine war, challenging the established world order and systems of trade; at another moment, it is US-China rivalry, threatening to fragment the globe along technological, capital, and ideological lines; and, at yet another moment, it is rise of nations like Saudi Arabia and India, carving out their own centers of gravity, that will stand alongside the West and China.

How should an executive, trying to keep the business competitive, interpret all this?

As sign posts, hopefully creating an immediate sense of urgency, that the time has come to draw up a new strategy, allowing a business to play geopolitics, instead of being paralysed by it.

Queue a ‘Geopolitics first’ strategy.

The risk of not doing this? Look at the experiences of some of the world’s largest companies.

Just ask the CEO of KLM-Air France, who said he cannot compete with Chinese airlines, able to fly through Russian airspace (while many Western airlines are banned); or talk to Pirelli, the Italian tire maker, who got the Italian government to change the rules for Chinese board members to stop a Chinese takeover; and, of course, do not forget that Sequoia Capital is breaking up into three separate geographical businesses, because of geopolitics.

Without a ‘Geopolitics first’ strategy, this is the fate of many firms: unhappily ceding marketshare to competition, becoming glued to the state, or even breaking up the business.

No business wants to be in this situation. That is why, a select few, are already ahead of the game, deploying their own ‘Geopolitics first’ strategy.

When the US restricted exports of AI chips to China, both, Intel and Nvidia removed features from their existing chips to comply with sanctions. However, AMD said that it plans to build a “sanctions compliant” chip from the ground-up, a ‘Geopolitics first’ approach.

Or, look at BYD, the Chinese electric car company, who is buying its own ships to take its cars to the world, and not depend on Western shipping companies, a significant business move, based entirely on the flareup between Washington and Beijing.

Most C-suite executives have spent tremendous time and resources to make their organisation proactive, not reactive. Today, when it comes to the relationship between a business and the world, being proactive and resilient is all about geopolitics.

Of course, some companies might think they have already done the geopolitical “heavy lifting.” Maybe, they are bringing supply chains back to the West, creating new production facilities in Vietnam or Thailand, or have steered some investments away from China. This is not enough. Because, the curveballs being thrown, require a strategy rewrite, not amendments or impulsive decisions.

Take the case of Tesla. After Tesla built up its factory in China, an unexpected challenge emerged. The US electric car company hoped its factory in China would allow it to export cars to the world. Then, India came into the picture and told Tesla it could not sell Chinese-made cars in India because of the New Delhi-Beijing feud. Strangely, technology, expected to overcome differences and borders, was reasserting them.

Whether or not executives want to accept it, they now have a responsibility to lead their organisation around, or through, the new geopolitical fires.

And while it was easy to craft new strategy when the mobile craze struck, or when ChatGPT created new AI buzz, as the effects of those forces were clear, it is not the same with geopolitics.

For business, geopolitics is a new world, one that is strange, unpredictable, and seemingly never-ending. All of this is true. But, this is not the lens companies should be eyeing geopolitics through.

Instead, there is only one question to ask, one lens to adopt: do I wait until geopolitics knocks on my door, and risk losing billions? Or, do I act now, and try to protect billions?