INTRODUCTION

"The world is flat," "The end of history," "Politics will be the entertainment of the 21st century"-these are just some of the superficially compelling catchphrases by leading thinkers that at one time or another resonated with those of us who have had leadership responsibilities in business over the last few decades.

The general consensus in executive circles was clear.

Multilateral trade agreements, reductions in export restrictions, and opposition to state subsidies, combined with a liberal consensus about the benefits of globalization, had lifted hundreds of millions of people in emerging markets out of poverty. Almost all macro indicators showed improvements in worldwide living standards despite a strongly growing global population. Technological advances gave billions of people access to information previously beyond their reach. Actual wars were confined to a few (mostly ethnic) conflict zones while state borders were generally seen as sacrosanct. Concerns about the uneven distribution of these benefits were treated as political challenges that democratically elected parties existed to address. Corporate leaders could concentrate on optimizing their global supply chains, serving their international customer base, and satisfying their worldwide investors. Corporate social responsibility was a clearly defined area with growing numbers of experts and improved measurement systems.

Turns out the world is not flat but fluid, it was just a holiday from history and not its end, and far from being an entertainment politics shape our lifes. We find ourselves in a situation where geopolitical tensions, technological disruptions, and climate challenges are causing social fragmentation and political conflicts. This is the "new normal" for leaders the world over.

It is a world where government intervention, industrial policy, and regulatory action are the rule rather than the exception. Within a short time, latent geopolitical conflicts have erupted into open warfare, and long-held views of the global order are being challenged. The transatlantic consensus on how both business and the rule of law should work in a liberal democracy no longer seems self-evident. Transactions "trump" relationships.

As the legitimacy of corporations and their leaders is challenged, social media adds to the pressure. More often than not, seemingly rational arguments fall on deaf ears. Emotional responses prevail and flareups are the norm, not the exception.

Not surprisingly, there is a great deal of uncertainty and anxiety about where this will lead. What is surprising to me is the difference in reactions and attitudes between leaders in what is commonly referred to as the West and their counterparts in (at least parts of) the so-called Global South. Except for tech leaders, elites in Europe and to a lesser degree the United States seem bent on outdoing each other in pessimism.

"Germany is losing its industrial edge. France is fragmented and ungovernable. The UK is broke and broken. The EU is sclerotic with bureaucracy. The US is on the edge of civil war. Transatlantic relations are dead. China is (in) trouble. Globalization is unwinding. The Dollar-based monetary system is being replaced. Immigration is uncontrollable. Borders have become indefensible. Welfare systems are overstretched. National debt burdens are unsustainable. Healthcare systems are collapsing. Infrastructure is crumbling. Politicians are subpar. Populism is rising. Democracy is failing, tech 'Broligarchs' are dominating, AI is out of control, etc., etc."

Most private discussions or public debates appear to be dominated by variations on these and similar themes. Worse, if someone comes up with a particularly dramatic statistic, the tendency is not to discuss potential solutions but for somebody to come up with an even more dramatic negative fact or statement in response. There seems to be an almost masochistic delight in mutually reinforced pessimism, in a triumphalism of competitive complaining.

Of course, all these complaints have foundations in reality, yet the question is less how to describe these problems than how to deal with them. There seems to be a streak of resignation and an almost defeatist mentality in Western societies, in stark contrast to the forward-looking and fundamentally optimistic views I encounter when visiting countries in the Gulf or Asia, despite the significant challenges they face-many of which are not very different from ours, some even more daunting. Yet the focus there is on action, not nostalgia or complaining.

I have always liked Karl Popper's edict that optimism is a moral duty. Accordingly, I have always attempted to provide a positive viewpoint when asked and a can-do approach to solving the many challenges we faced while I had official leadership responsibilities.

Recently, I received a further wake-up call at a private meeting held by a leading tech firm. Ironically, the credit for this goes not to one of the high-powered speakers but to a comedian who was meant to cheer us up at the end of the three-day event. After a string of humorous observations about the proceedings he got serious.

"How is it possible that a group like the one in this room is sitting around complaining to each other? Think of how privileged you are to be here. You are all here because you are leaders in your fields. If you can't change things for the better, who can? What's keeping you from moving your derriere?"

This comedian got me thinking about the wider responsibilities of leaders, and business leaders in particular, in the current atmosphere. Negativism may sell in politics and the media, but it has never worked in business. Private enterprise by definition requires a positive attitude. So why are so many businesspeople joining the chorus of complainers rather than stepping up with answers?

One of the key reasons may be that many of today's leadership challenges come from an angle that most leaders are traditionally unprepared for and therefore uncomfortable with. Let's call it the legitimacy dimension. The term refers to social acceptance of an institution, its leaders or actions. It is based on emotions more than facts. It may be a general feeling or a situational one. The legitimacy of an institution or individuals will be viewed differently by different social groups or subsets of groups, including employees, clients, media, politicians, investors. The views of those stakeholders may and often will change over time.

The politicized "new normal" in general and the ubiquity of social media in particular have significantly increased these pressures.

Legitimacy is dynamic, volatile, and agnostic. It lies not in how an institution or its leaders feel about an issue but in what others think and feel. Perceived legitimacy will influence corporate performance and vice versa. Traditional channels of communication often fail to deal with the complexities of the necessary interactions. Like it or not, the job description for modern business leaders has been expanded to include the roles of cultural guardian, political influencer, and social activist. This is quite a challenge, and one that you will have to face regardless of your personal convictions. In this and other respects, today's world is quite different from that which formed the personalities of many of today's leaders.

Further reflection reminded me of a speech that Bill Bain, the founder of the strategic consulting firm Bain & Co., delivered when I was working for him as a young consultant in Boston. It was titled "The illusion of satisfactory underperformance."

He argued that organizations and people tend to consider their performance quite satisfactory as long as it's better than that of their immediate competitors or their own previous achievements. But what if that performance fails to match the inherent potential of the organization or the individual?

The same could be said of entire societies or economies that are falling short of their potential without even realizing it. What if we in the West are now living in the collective illusion of satisfactory underperformance? And why, when faced with the evidence of our underperformance, is all we can think of to complain and blame others rather than working towards a solution?

Was I personally living in that...