Tech at the centre of geopolitics: 5 new strategic capabilities for geotech organizations

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Olaf Groth, Professional Faculty, Haas School of Business, University of California, Berkeley, Tobias Straube, Associate Partner, VP Operations & Analysis, Cambrian Futures

• Corporations are adapting to an era where technology, geopolitics and global business practices are interconnected.
• As emerging technologies converge with national security, diplomacy and commerce, technology is entwined with geopolitics, posing new challenges for industries and businesses.
• There are five strategies for companies to navigate geopolitics spanning foresight, evaluation, data-driven practices, integrated strategic planning and the creation of geotech response teams.

Micron Technology saw trouble brewing by mid-2023. With geopolitical tensions rising and semiconductors becoming a crucial national security concern, the US company had scaled back its presence in mainland China. Micron earned roughly half its 2017 sales there. Five years later, it had pared that figure to just 11%.

Micron still operated key design and supply chain centres andemployed about 3,000 people in China in 2023, when Chinese regulators slapped it with a “cybersecurity review” and the company announced plans to invest as much as $100 billion in a new chip factory in New York. With the US CHIPS Act seeking to minimize semiconductor investments in China, the company had little choice but to take a side. It faced a reckoning with a messy new business reality – business, tech and geopolitics had merged into a single inseparable thread.

Indeed, the remarkable capabilities of artificial intelligence (AI), quantum computing and genomics have permanently fused advanced technological innovation with national security, diplomacy, commerce and research and development (R&D) concerns, and the resulting geotech reality creates critical challenges across virtually every industry. Many companies that never considered geopolitics a core concern will find it inescapable now.

Evolution of a geotech world

To understand how things have changed, consider Boeing’s strategic decisions during the US-EU trade conflict over Airbus – a multilayered competition that combined commercial, political and legal considerations. As the trade war dragged on, Boeing developed new organizational mechanisms to help its leaders analyze and prepare for the complex intersection of these forces and interests, which it had not fully considered a core element of its business operations. For example, as the world and the aeroplane manufacturing industry grew more technologically and politically complex, Boeing realized its network of thousands of suppliers had become increasingly difficult to manage. So, it developed a system of roughly 20 main suppliers with tiers of sub-suppliers below them.

As Boeing sought to “globally localize” its business, it needed people who understood the realities of different economic and political systems, conditions and stakeholders. This requirement gave birth to Boeing’s international relations group, with executives in each jurisdiction building teams that integrated the company’s legal and political initiatives and its R&D and supplier partnerships. This combination of political and technological tasks was based within each country and operating unit and fed up throughout the company. (Co-author Olaf Groth participated in this effort.)

As challenging as this was, Boeing had the luxury of time in an era of prosperous globalization. That stability disappeared in 2007 with the beginning of a long chain of globally disruptive events – cascading financial crises, the resurgence of a belligerent Russia, migration flows to the northern hemisphere, stronger nationalist parties, China’s techno-economic power projection, climate disasters, a pandemic, and the rise of artificial intelligence (AI) and related technologies. These developments began to intertwine with and amplify one another until they formed a fully blended witch’s brew of high-urgency issues for corporate stakeholders.

Most companies reacted by pulling inward toward what they knew and could control. This natural but flawed tendency – born of a belief that broader geotech issues are not core business concerns – gave leaders a misleading sense that their teams could still parse risks and opportunities into discrete, understandable nuggets. However, specialized planning and response groups no longer suffice amidst the speed and complexity of the geotech world. The interwoven flows of everything from capital and energy to data and genetic material require more flexible and faster ways to understand and respond to multifaceted disruptions.

5 strategic capabilities for the geotech world

Like the Boeing example, companies must allow business units to tailor responses to their unique realities. However, in the world Boeing, Micron and others inhabit today, these efforts must be infused across the entire organization at far greater speeds and in a more complex technological and geopolitical environment. Each unit needs to sense the rapidly evolving geotech trends that cause shifts in its operating environment, synthesize insights to understand potential risks, seize opportunities and help transform the organization to embrace changes sustainably.

To accomplish this, companies need to integrate five strategic capabilities:

• Foresight and system-thinking evaluation. Deploying a forward-looking approach to developments and challenges taking into account interdependencies of the geotech forces that cause the five Cs of tectonic shifts in the company’s ecosystem – China, COVID-19-like bioshocks, climate change, cybersecurity, and cognitive and crypto technologies.
• Data-driven best practices benchmarking. Evaluating and comparing practices against global leaders to test risk management and internal readiness with hard metrics dashboards.
• Simulations of actors and positions. Envisioning more resilient roadmaps for portfolios, supply chains and market positions with new prioritization, configuration and partnerships.
• Integration of geotech considerations. Incorporating geotechnical factors into headquarters and business unit budgets and execution strategies (e.g. investing in intelligent supply chain management or replacing mega-factories with nano-factory networks).
• Creating geotech response teams. Establishing special groups that orchestrate, anchor, calibrate and manage the first four capabilities across functional stovepipes and markets, assuring return-on-investment (ROI) resilience and business continuity.

Geotech response teams

Geotech response teams build on Boeing’s initiatives by integrating these five strategic capabilities into every facet of a company’s operations. Effective geotech response teams will employ multidisciplinary expertise across fields as varied as cognitive tech, anthropology, climate science and national security.

They will carry enough credibility (e.g. through board mandates and C-suite ties) to work on equal terms with established departments, so their insights feed back into the supply chain, legal, risk management and other expert groups as they synthesize resilient positions and diffuse them into daily practice. They will pick up signals from the front lines of their respective fields, so companies will need to build structures to accommodate decentralized teams of physical and digital “feelers” that can network locally and globally.

By infusing these new strategic capabilities company-wide, Geotech response teams will help every division at every level generate the geotech-ready strategies necessary for future growth, resilience and ROI assurance.