Directors urged to implement megatrend strategies

Friday, 01 March 2024

Brian Tyson photo
Brian Tyson
Chair, SEC Newgate Australia

    This year is shaping up to be one of elections, rising pessimism and angry populism — and directors need to be getting their strategies in place now. 

    As we progress through 2024, we are seeing shifts in the national mood that are impossible to ignore. Businesses and their boards face a rapidly changing economic, social and political landscape where a range of new macrotrends are starting to emerge. This will also be the year of elections and misinformation, with more than half the globe — more than four billion people in more than 67 countries including Indonesia, India, the UK and the US — set to go to the polls this year.

    Social media and misinformation driven by artificial intelligence (AI) will play a significant role in the outcome of these crucial elections and drive political discourse globally. These are trends that business and boards need to identify early and plan for — and ignore at their brand peril.

    Elections over the past 18 months, in countries such as Italy, the Netherlands, Argentina and New Zealand have resulted in a sharp lurch to the right, marked by the rise of angry populism as voters react to what they see as governments, bureaucracy, institutions and media, as well as many corporates, ignoring mainstream issues in the pursuit of ideology and social outcomes.

    In Australia, the Albanese government continues to grapple with the impact of the cost of living crisis. The government is now responding through direct intervention with a focus on wages and workplace standards, initiatives such as the changes to stage-three tax cuts and sector reviews to address cost of living concerns, while also confronting the challenges of the transition of the energy economy in response to climate change.

    The national mood is negative

    According to the SEC Newgate Mood of the Nation report, the overarching sentiment in the community is rising pessimism and distrust, which is only now beginning to show signs of improvement since the end of the pandemic two years ago.

    There has been a major shift in how people are consuming information, with social media dominating (81 per cent of Australians now use social media) and Australians increasingly seeking highly targeted and engaging content to the exclusion of all else. This represents profound implications for organisations, businesses and governments as they chart their course into the uncertain waters of 2024. More than ever, authentic, transparent and honest communication will be the linchpin needed to win back the trust of a disillusioned Australia.

    Through its tracking Mood of the Nation research, and synthesising the work done through the CSIRO Our Future World report outlining megatrends for Australia and globally, SEC Newgate has identified five emerging trends for 2024.

    1. People are asking: “Is the economy really working for me?”

    Cost of living continues to drive consumer and citizen behaviour, fuelling pessimism and distrust. Real wages have fallen significantly behind inflation, with increasing interest rates and other rising costs eating into household budgets. This is leading to greater government intervention, with energy and grocery prices being targeted and other sectors likely to follow.

    2. A sharper focus on environmental, people and governance risk

    This trend highlights the social drivers influencing future consumer, citizen and employee behaviour. Emerging social trends mean that it is critical to understand community perceptions and experiences. There is a demand for action over virtue, with authenticity and increased transparency from organisations and governments fundamental to maintaining trust, driving the desire for ethical design.

    3. The impact of climate change and extreme weather on people’s personal lives and household budgets

    The canary in the coal mine on this issue is insurance. Exponential growth in natural disaster payouts is leading to escalating insurance premiums, prompting many households to opt out as the list of natural disaster zones rapidly grows and leaves communities uninsurable.

    People are responding by personally taking charge of their own climate change response as Australians become one of the biggest adopters of solar technology and look to greater government assistance on batteries and EVs, which is transforming homes into virtual power plants (VPPs).

    4. Risk to Australia’s place in the world

    For the first time since World War II, Australians are living with geopolitical risk, particularly in our own Asia Pacific backyard, which is increasingly clouding their outlook on the future.

    Energy shocks from the Ukraine conflict, growing political activism on our streets from Middle East conflicts and the rise of China’s power and influence have all made Australians feel less safe and confident about their futures.

    5. AI, cyber and digitisation: Friend or foe?

    Australians feel they are being propelled into a brave new world of AI, cybercrime and digitisation without protection. In 2023, Australians reported a cybercrime every six minutes, which is only expected to increase into 2024. People are seeking greater protections and looking to organisations, business and government to take steps to protect their information.

    As Australians increasingly seek verified sources of truth in an information-saturated world, organisations must adapt their communication strategies. Effectively targeted, relevant information is now the only currency of engagement.

    Real stakeholder engagement

    These trends mean businesses need to develop stronger relationships with their customers and understand how to effectively respond to these megatrends to ensure control of their own narratives and protect against interventions that may impact reputation. It is now more important than ever that businesses ensure that messages and narratives align with the realities of their customers’ lives and avoid over-reaching in an environment of heightened pessimism and mistrust.

    Genuine stakeholder engagement must become the cornerstone of organisational resilience. Authenticity and transparency are essential in an environment where trust is eroding. Employees are increasingly seen as trusted sources of information and can see the disconnect between what is being said and what is being done. Therefore, it is important to consider them and their views when making big decisions or announcements.

    The prevailing pessimism calls for a rethink of organisations’ strategic communications, based on a research-based approach that scientifically measures what is cutting through. If organisations, business and government alike work to address these challenges, it may well rekindle the flame of optimism that is so vital to Australia’s future.

    This article first appeared under the headline 'Boards Beware’ in the March 2024 issue of Company Director magazine.

    Brian Tyson is chair of SEC Newgate Australia and deputy CEO and head of APAC region for SEC Newgate S.p.A. (the parent company of SEC Newgate Australia).

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