MANY company is never easy. Must juggle the demands of shareholders, employees, customers, politicians and regulators. By 2019, juggling may have become a little more difficult. In addition to preparing for the inevitable next crisis – and especially in the United States, with declining profits – last year, the corporate world had to face two new or new sets of challenges.
The first has to do with the revival of geopolitics. In the decades after World War II, the world globalized widely within the two warring ideological fields. Supply chains spread across the democratic West or the Communist East, but rarely came between them. This began to change when China opened in the late 1970s and accelerated when communism collapsed in Europe a decade later. Because cold war divisions are a thing of the past, multinationals are guided by the logic of trade that maximizes profits.
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No longer. From trade wars to Brexit, geopolitical barriers are rising again across the world's supply chains. Technology companies, which get critical components from a surprisingly small number of manufacturers, many of them in vulnerable Taiwan, are particularly exposed. Western companies like Apple continue to rely heavily on Chinese manufacturers. Although Westerners increasingly covet Chinese technology, many Chinese companies still rely on Western know-how. When the US government banned its companies from doing business with Huawei for national security reasons in May, some predicted that China's telecommunications equipment maker could collapse. This did not happened. But Huawei's foreign suspicions are impeding China Inc.'s global rise. Perhaps in an effort to soften them, Huawei's boss told The Economist in September that he would consider selling his foreign business to a Western buyer. Expect geopolitical concerns hanging over the meeting rooms in 2020.
The second set of problems for top executives stems from a reaction to capitalism – or at least the version practiced so far this century. Companies are increasingly asked to find a goal beyond profit maximization. They are expected to be more diverse, greener and generally gentler. Internet companies, in particular, are being pursued by authorities on both sides of the Atlantic for playing fast and loose with user data and spurring political polarization. Calls to end Big Tech are getting louder. This has not yet affected their juicy profits. But that led Mark Zuckerberg to consider a new business model for Facebook that is less reliant on online advertising (even though Facebook's nascent cryptocurrency didn't get anywhere quickly). It may also have motivated Google founders Sergey Brin and Larry Page to formally hand over the management of their parent company to Sundar Pichai, head of their main search business.
Nor are they just corporations. In both America and Asia, business schools are also reinventing themselves for the new age. Billionaires are in the sights of millennial socialists. Even reclusive German business barons are finding it harder to keep a low profile, and McKinsey management consulting high priests are rethinking their role.
However, 2019 also saw many examples of capitalism's self-correcting capacity. Companies are becoming more aware of the risks of climate change, both for their reputation and their operations (even if few still do anything about it). True, there is still a lot of money in pursuit of carbon industries, as Saudi Aramco's $ 25.6 billion initial public offering in December attests. But a handful of climate tycoons are also investing a lot of money in investments that heal the planet – expecting a healthy return.
Stock markets can be foamy, but all year long they showed less patience for deficit unicorns like Uber and Lyft than venture capitalists. WeWork, an office rental company masquerading as a technology company, imploded after investors raised questions about its billions in losses and deaf corporate governance before its aborted initial public offering (giving a black eye to its main sponsor, Masayoshi Son, and the VCs more widely). As long as competition and capital markets function properly – as in the thriving entertainment industry – capitalism can, 2019 showed, serve consumers and shareholders.