A few weeks ago I wrote about the need those in a leadership position have to manage. I wrote about the need to have foresight and preparedness (which come from learning) when trying to manage the unexpected and the disruption it brings.

The word ‘disruption’ has become a buzz word. So we speak of ‘disruptive’ technology and ‘disruptive’ innovation. A definition of both is easy to locate. The word ‘disruption’ has a negative connotation, even if in these circumstances it is used in a positive sense. The sense one gets when this term is used is of a new order of things – like a ground-breaking product that creates a completely new industry, or shakes up an industry, or creates a new market.

However, I also believe that we are living in times where disruption is not only being caused by technology or by innovation but also by society and political decision-making, which eventually has an impact on economic decision-making. The two most recent examples are the tariffs being imposed by leading economies on imports from other leading economies (for example, the tariffs war between the US and the EU) and the immigration issue.

Why is the tariff war a disruption? Let’s face it, since the end of World War II, countries have sought to encourage international trade because it was seen to lead to more efficiency and greater wealth. The European Union was built on the fundamental principle of the free movement of goods, apart from other principles. Various efforts were made at a global level to promote free trade and this is what gave rise to the concept of globalisation.

Companies have grown and nations have prospered thanks to international trade without barriers. Malta is one such nation. The tariff war will now reverse this process in a significant manner and will change the way nations, businesses and individuals trade. Businesses may need to find an alternative route to grow.

Both the tariff war and the position on migration are political decisions that will eventually have a very strong impact on the economy

The immigration issue is also a disruption. Although there has been an element of concern about immigration for a number of years, it has been recognised that developed economies require migrants to prop up their productive activities. With ageing populations in most developed economies, immigrants were seen to be an important feature of the economy such as that of Germany, Japan, France and the US. Immigrants were allowed to integrate in these economies as they were seen as an asset. Even in this case we have had a reversal of policy in certain countries which will cause disruption. If immigration is suddenly halted or reduced significantly by a country that has an ageing population (I have Italy in mind), how will it grow the economy? How will it pay for its pensions and social welfare?

Both the tariff war and the position on migration are political decisions that will eventually have a very strong impact on the economy.

However, there is not just political decision-making involved. There are also changes in society, which is experiencing a total restructuring of its values. The new workforce in the world’s leading economies (and I would also add Malta) is becoming a knowledge-based workforce. The main asset is no longer the physical resource but the grey cells that are present in the mind of a human being and how these grey cells are harnessed for success.

Knowledge has become the only scarce and irreplaceable resource. In one way or another, knowledge can make up for a shortfall in the other factors of production – land, capital and entrepreneurship. This is also a cause of disruption and it changes in no small way the way an economy is managed. The generally increased access to tertiary education ensures that knowledge will remain the most fundamental resource in an economy.

The disruption which these and other factors will bring, and coupled with the disruption caused by innovation and technology, makes one wonder what the future of work will be like. Will the traditional business structure as we know it today survive into the future? This leads me to another question. How will business leaders and political leaders respond to this disruption, some of which is being caused by their own decisions?