César Vera
Chief Commercial Officer
Naviera Integral
/
Expert Contributor

A Good Strategy Should Always Start With the Right Questions

By César Vera Méndez | Fri, 01/07/2022 - 11:00

Just when it seems we are economically emerging from the COVID-19 crisis, another variant comes along. However, there will be a time when leaders will need to move from safeguarding lives and livelihoods to a more profound challenge: bettering them.

This is a bigger and longer-lasting challenge. Growth remains a goal that for quite some time now has required sustainability and most recently, inclusion. These three goals do not always pull in the same direction. So, how do we build (today) a future that delivers growth and sustainability and inclusion?

First and foremost, those three goals or elements are deeply connected. Let us consider that growth is needed to pay for the transitions needed to make the economy more sustainable and inclusive. Sustainability helps us continue the growth needed for the current generation and those to follow. And inclusion represents an opportunity for productive work and a satisfying life for everyone. Hence, it is imperative that the current and next era of business forms a powerful dynamic between growth, sustainability, and inclusion. It’s not an easy task, though.

Happily, thinkers, strategists, activists, dreamers, and doers are working on it. Are you? Is Mexico?

  • Growth has been difficult to achieve. For mature economies, GDP growth has halved to 1 percent per year on average since the 2008 global financial crisis. Mexico has been on a constant decline since 2010, with a GDP moving from 5 percent to -8.3 percent in 2020.
  • Poverty continues to be native and regular even though some “progress” has been made. In Mexico, the national poverty line in 2018 was at 52.4 million people and by the end of 2020 there were 56 million out of a population of about 126 million. The COVID-19 pandemic also added to the economic decline and helped push those on the edge into actual poverty. This will persist unless today’s leaders create sufficient jobs with decent wages, along with a robust social contract that ensures access to affordable housing, healthcare, and energy. To top it off, a new threat to personal income has emerged: the rise of technology-driven changes in the ways we work, which the pandemic has accelerated.
  • A sustainable future requires investment. Just to achieve net-zero emissions in energy generation worldwide by 2030 might require investments of some $5 trillion yes, $5 TRILLION, not a typo every year until then. Additional investments needed for decarbonization in agriculture, transportation, and other sectors could almost double the “monies” needed. Yes, many of these investments would produce a solid return; however, their financing or pricing is not yet set up.

Vicious or Virtuous Circle?

Sustainable, inclusive growth is required for a virtuous circle. Growth includes the ambition of increased prosperity and well-being, including economic or profit growth for companies, GDP growth for nations and measures such as life satisfaction for citizens, including dignity of work. Inclusion considers equality of opportunity and broad-based progress of outcomes for all while narrowing the inequalities among genders, ages, ethnicities, family backgrounds, and places of residence. With sustainability, the objective is environmental resilience, reducing climate risk yet including the preservation of natural capital.

Can we find the areas of strength and reinforcement among these three goals or elements?

  • Growth can support inclusion through the creation of meaningful jobs, lifting incomes and amending labor market inadequacies.
  • Growth enables sustainability by encouraging investment.
  • With greater inclusion and sustainability, growth is promoted via new demand and investment opportunities.
  • Sustainability reinforces both inclusion and growth through the energy transition by lowering costs that make energy more accessible, and consequently leading to more productive lives.

Multiple experiments will be needed, along with rapid and escalating successes, allowing the broad participation of everyone capable, willing and committed to this, just as the world has done mostly with the pandemic. Let us join efforts today and make 2022 the Year of the Virtuous Spiral!

Photo by:   César Vera