Strategic Leadership in a Complex and Volatile World
An excerpt from the new book Strategy and Change, coming September 2025
For leaders tasked with managing organizational performance, most decisions can be filtered through the lens of two variables—maximizing revenue and managing cost. At the same time, experienced executives weigh two additional factors—opportunity and risk. These factors form heuristics—mental shortcuts for decision-making—both conscious and assumed that guide decisions up and down the organization. That said, a well-honed instinct isn’t always well suited to the kinds of novel questions and market shifts brought by disruptive change.
Even for the best executives, choices have become more challenging. Accelerating technological innovation and changing customer expectations are just two of the complex trends that organizations face today. Most of the leaders we’ve spoken with agree—regardless of industry or sector—organizations face an onslaught of disruptive events in an increasingly interconnected world.
Every four years, the US National Intelligence Council (NIC) produces a report on the state of world affairs and the implications of existing trends for future decades. First published in February of 1997, [1] the NIC Global Trends report has evolved to become one of the most rigorous assessments of its kind. For our purposes, reviewing the report—and how it has evolved over the course of thirty years—serves as a useful entry point for exploring the volatility and disruptive change that executives must consider. The 2021 report opens with five themes that underpin a central thesis that at every level, society and organizations face cause for concern:
Global Challenges: shared challenges—including climate change, disease, financial crises, and technology disruptions—are likely to manifest more frequently and intensely in almost every region and country. These challenges—which often lack a direct human agent or perpetrator—will produce wide-spread strains on states and societies as well as shocks that could be catastrophic.
Fragmentation: the difficulty of addressing these transnational challenges iscompounded in part by increasing fragmentation within communities, states, and the international system. Paradoxically, as the world has grown more connected through communications technology, trade, and the movement of people, that very connectivity has divided and fragmented people and countries.
Disequilibrium: the scale of transnational challenges, and the emerging implications of fragmentation, are exceeding the capacity of existing systems and structures, highlighting the third theme: disequilibrium. There is an increasing mismatch at all levels between challenges and needs with the systems and organizations to deal with them.
Contestation: A key consequence of greater imbalance is greater contestation within communities, states, and the international community. This encompasses rising tensions, division, and competition in societies, states, and at the international level. Many societies are increasingly divided among identity affiliations and at risk of greater fracturing. Relationships between societies and governments will be under persistent strain as states struggle to meet rising demands from populations.
Adaptation: Finally, adaptation will be both an imperative and a key source of advantage for all actors in this world. […] The most effective states are likely to be those that can build societal consensus and trust toward collective action on adaptation and harness the relative expertise, capabilities, and relationships of non-state actors to complement state capacity. [2]
Later in the report, these themes are brought to life through five scenarios for what the world might look like in 2040, each a specific configuration of power and influence presented “to widen the aperture to the possibilities.”
These themes give us a lot to think about. This is magnified when we compare the latest report to the NIC’s original trends report, authored nearly thirty years earlier. That first publication, written in 1997, described China in skeptical terms:
By dint of its size, regional sweep, economic growth, territorial claims, and insistence on being taken seriously as a major foreign policy player, China will preoccupy US policymakers through 2010 and beyond. While China has the potential to become the region’s dominant military power, it is beset by significant internal problems that in our judgment will preclude it from becoming so during this time frame. Indeed, many of the global trends we highlighted—population (and strains associated with urbanization), energy demands, and food—are domestic issues for China. As a result, its military modernization and power-projection capabilities will increase only gradually. The Chinese central government will continue to have difficulties collecting revenues to fund its programs. With 70% of its population still in agriculture, China has a long way to go to develop a modern economy on a nationwide basis. [3]
Fast forward to today and China is a global superpower central to the NIC’s analysis, with further complexity arising from a notable emphasis on non-state actors like corporations and ideological communities.
The major themes of the NIC Global Trends report and the evolving nature of the report’s findings over time leaves us with one unavoidable conclusion—the issues leaders face today have become more complicated and the decisions more challenging.
[1] “Global Trends 2010,” National Intelligence Council, November 1997, https://www.dni.gov/index.php/who-we-are/organizations/mission-integration/nic/nic-related-menus/nic-related-content/global-trends-2010.
[2] “Global Trends 2040,” National Intelligence Council (2021): p. 2-3, https://www.jstor.org/stable/45390866.
[3] “Global Trends 2010,” National Intelligence Council.
