As we closed the curtain on a very difficult pandemic year and start a fresh new year, what have we learned about management and leadership that can help us in 2021?

The first lesson of 2020 is about strategic management of uncertainty. Leaders cannot anticipate rare events like a pandemic but they should develop robust strategies that can work in different scenarios or at least prevent the most negative outcomes of these scenarios. One Euro spent in prevention and readiness has a very large return when a rare negative event happens. We have failed globally in preparing for this pandemic, with incalculable human and economic costs. And this was never a question “if a pandemic could happen” but rather, like Bill Gates warned, “when will a pandemic strike”. I hope Humankind learned this lesson and can apply it to other coming crises, such as climate change, deforestation and biodiversity loss. In these areas, the expectation for 2021 is positive. The year 2020 was, despite the pandemic, the year of affirming Climate Change as the key societal problem the world needs to tackle in this decade. The challenge and opportunity for energy transition – decarbonising the economy - is already changing profoundly corporate strategies and the financial sector. Environmental sustainability is now firmly in the global agenda and this is probably the only theme capable of aligning in 2021 the interests of Europe, China and Japan, as well as the USA with a Biden administration.

If in the environmental area the perspectives are positive, the problem of economic inequality needs more attention from both national and global decision-makers in 2021. The global gains in poverty alleviation of the last 20 years suffered a serious setback with the pandemic, with a deepening of inequality both within countries and between countries.

Within countries, the pandemic is having a very uneven impact because it affected severely specific economic sectors, small companies and people with less formal employment situations. For example, in Portugal 20% of the populations reports having lost more than half of their income, while the remainder 80% have not been affected. This situation calls for an increase in community solidarity, a strengthening of the social sector, and strong governmental support to disadvantaged groups.

Between countries, 2021 will be a diverging world. On one hand, the majority of the developed world will vaccinate its population during 2021 and will likely witness a vibrant economic recovery in the 2nd semester, after almost a year of strong government support with generous subsidies. On the other hand, developing countries, particularly in Africa and segments of Latin America and Asia, will have difficulty in accessing the vaccines and implementing full-fledged vaccination programs. These countries will need to keep sanitary and travel restrictions well into 2022 and will face a continuing economic weakness. This will lead to a poverty increase in these regions to a level not yet seen this century. This will be one of the more difficult issues to deal with in 2021 and multilateral organizations such as the UN, the IMF and the World Bank will have a key role to play at the global stage. This will also be a year in which the solidarity between countries and global philanthropy will be put to a tough test, with initiatives like COVAX being key to accelerate global vaccination.

The final lesson of 2021 is on the role and importance of responsible leadership, capable of taking decisions based on evidence, and implement consistent and purposeful policies and strategies that create value for all stakeholders, in particular the ones with less voice. Naturally, the populist leaders were the most incompetent ones in dealing with the pandemic, as sadly exemplified by the US and Brazil. The populist strategy is typically one of offering simple solutions to imaginary crisis, pointing to certain groups as scapegoats for the problems. When a real crisis needs to be dealt with, the incompetence of these leaders and the staff around them becomes painfully visible. May this lesson serve as a warning signal for voters in countries that will face elections in the near future. In leadership, there is no replacement for values, wisdom, competence and the ability to act with purpose.

Have a great and impactful week!

Filipe Santos
Dean of CATÓLICA-LISBON

This article refers to edition #69 of the "Have a Great and Impactful Week" Newsletter.
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