Why Geopolitical Skills Are Making or Breaking Leadership Careers

From supply chain chaos to trade wars, leaders who can’t navigate geopolitics are being left behind. Here’s what you need to know.

Global trade patterns are undergoing their most dramatic transformation since the end of the Cold War. As Jamie Dimon, CEO of JPMorgan Chase, recently warned, “The restructuring of trade and the remilitarization of the world” are creating unprecedented challenges. For business leaders looking to keep the lights on, navigating the turbulence requires a mix of tact, geopolitical awareness and upskilling.

In the new reality of global business leadership, understanding geopolitics isn’t just for diplomats anymore—it’s becoming as essential as financial acumen.

“While we hope for the best, these events and the prevailing uncertainty demonstrate why we must be prepared for any environment,” Dimon emphasized during a recent earnings call, highlighting concerns about everything from trade restructuring to global remilitarization.

“This Isn’t Your Parents’ Global Economy”

The statistics tell a dramatic story: U.S. goods imports from China declined 10% between 2018 and 2022, while surging from other regions—up 18% from Mexico, 44% from India, and a remarkable 65% from ASEAN nations.

By 2023, over 90% of North American manufacturing companies had moved production or supply chain operations in the past five years, according to a report by the Boston Consultancy Group. Global trade patterns are dramatically shifting, with China’s share in U.S. imports dropping 8 percentage points since 2017 (with the U.S’s reciprocal share down by 4).

As global trade undergoes diversification, the choice of who you get your supplies from (and inversely, who you supply) is increasingly a facet of how nations approach security.

“We see nearly every country and company focused on security, be it food, water, energy, cyber, financial or operational security. Consequently, they’re reconfiguring supply chains to meet the demands of their customers and other stakeholders,” Citigroup CEO Jane Fraser told world leaders at the APEC CEO Summit in San Fransisco in November 2023.

But while businesses decouple from the “factory of the world”, Chinese companies are also leveraging proven strategies from Japan’s experience navigating a hostile US regulatory framework over its trade surplus in the 1980s. Chinese companies have increasingly shifted production to countries like Vietnam and Mexico, in addition to re-routing exports of intermediate goods.

One of the most immediate impacts of turbulence is on the cost on shipping. In January 2024, container freight rates from Chinese ports surged 114% following disruptions in the Red Sea, forcing companies to fundamentally rethink their logistics strategies.

The implications are stark: each redirected shipment between Asia and Europe now incurs approximately $1 million in additional fuel costs. This transformation is hitting businesses where it hurts, and major brands like Tesla, Volvo, and IKEA are all grappling with supply disruptions.

Covid-19 was the biggest wake-up call yet, with many businesses reeling from the impact of “just-in-time” manufacturing proving more vulnerable to shock that anticipated. For logistics firms, this meant moving from a “just-in-time” to a “just-in-case” model, where they hold more buffer stock in local warehouses rather than relying on shipments arriving only when needed.

“Intricate supplier networks that span the globe can deliver with great efficiency, but they may contain hidden vulnerabilities,” warned a 2020 McKinsey latest analysis. The consulting firm, then, estimated that up to 26% of global exports could be relocated as companies respond to geopolitical pressures in a bid to build resilience.

What Top Companies Are Doing

Leading organizations are responding with massive investments in leadership development. The supply chain management market alone is projected to grow from $28.9 billion to $45.2 billion by 2027.

Citigroup is actively assessing geopolitical implications on its operations and adjusting its approach by:

• Diversifying geographic presence
• Strengthening risk management practices
• Exploring opportunities in less volatile regions

JPMorgan Chase is taking similar steps, with Dimon advocating for:

• Reduced dependence on single-country supply chains
• Increased engagement with emerging markets, particularly India
• Enhanced preparation for various economic scenarios

“One cannot overemphasize the importance of observation and a full assessment,” CEO Jamie Dimon wrote in a letter to shareholders in 2023, highlighting an approach from the military that he felt could help with decision-making in a crisis.

“The military, which often operates in extreme intensity of life and death and in the fog and uncertainty of war, uses the term ‘OODA loop’ (Observe, Orient, Decide, Act — repeat), a strategic process of constant review, analysis, decision making and action,” he noted.

The Career Impact

For individual leaders, the stakes are clear. Research shows that executives with strong geopolitical competencies are increasingly valued. BCG reports that organizations are now willing to accept more than 2% reduction in gross margins to secure reliable operations—making leaders who can navigate these challenges particularly valuable.

“The ability to understand and manage geopolitical risk is becoming as fundamental as financial management skills,” notes Harvard Business Publishing’s latest report on leadership development.

5 Steps to Get Ahead

With global trade patterns continuing to shift and geopolitical tensions rising, the time to develop these crucial skills is now.

1. Invest in continuous learning: Focus on understanding global trade patterns, cross-cultural communication, and digital trade management tools.
2. Build a global network: Develop relationships across different regions and cultures. With the benefits of different trade corridors varying from one crisis to the next, having resilient networks across geographies will become invaluable.
3. Develop crisis management skills: Practice scenario planning and rapid response strategies. Recent events in the Red Sea shipping routes demonstrate how quickly situations can escalate.
4. Master digital tools: The growing supply chain management software market shows the increasing importance of technological fluency.
5. Understand sustainability: Climate change is emerging as a critical factor in geopolitical risk assessment, affecting everything from production facilities to transport networks.

As companies invest heavily in adapting to this new reality, leaders who develop these competencies position themselves for success. The Boston Consulting Group’s research shows that half of North American companies have shifted more than 20% of their manufacturing and supply chain spending—creating opportunities for leaders who can navigate this transformation. One recommendation was to adopt an end market-focused sourcing and footprint strategy, which BCG says can “improve companies’ resilience and sustainability and cut their global manufacturing and supply-chain costs by 20% to 50%”.

Learning to Swim

Next steps? Consider enrolling in specialized training programs, especially if you want to explore more strategic opportunities in leveraging your supply chain networks to build greater resilience. Seek mentorship from those with global experience, and stay informed about geopolitical developments. Both your career – and your company’s future –  might depend on it.

Takeaways: The New Must-have Skills

1. Strategic thinking in complex environments: Understanding how global events interconnect and impact business operations
2. Digital fluency: Managing modern trade through technology
3. Cross-cultural negotiation: Navigating diverse market relationships
4. Crisis management: Responding to rapid global changes
5. Environmental risk assessment: Integrating climate considerations into business strategy