Geopolitical risks, management dilemmas and barriers to change

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On July 6th, we had the privilege of hosting Axel Miller, former senior partner at Oliver Wyman and alumnus of LMU Munich School of Management, in our International Management lecture. He enriched our understanding of managing in a volatile, uncertain, complex, and ambiguous (VUCA) world by sharing a compelling case study of a European banking group.

This bank had a competitive edge in financing oil exports from Russia and grain exports from Ukraine, leveraging its deep knowledge of Eastern European markets. However, everything changed in February 2022 when Russia's invasion of Ukraine abruptly shattered this business line.

Together with his team, Axel Miller guided the bank through a strategic realignment process that presented a critical dilemma: Should the bank venture into new commodity markets, such as the Middle East or Africa, to follow its long-standing customers, despite competitors possessing greater expertise there? Or should it leverage its unparalleled understanding of Eastern European markets in other business sectors?

Axel Miller underscored the pivotal role of the human factor throughout this transformation journey. When local branches vie for authority with corporate headquarters and managers strive to retain their positions of power, freed-up resources can quickly lead to destructive distribution battles if the wrong incentives are used. "Making decisions is the easy part," Axel Miller summarized. "However, rallying employees and gaining their commitment is far more challenging, yet absolutely indispensable."