Globally, the issue of massive government debt will continue to haunt commercial and trade progress in 2011. Heavily indebted countries are trying to avoid becoming like Greece, while rapidly developing countries seek to avoid becoming heavily indebted (and the problems that come with it). Public services will be constrained, which will have massive social and community implications. The student riots in London may be only the tip of the iceberg in developed economies where ‘ease of availability’ of education, infrastructure etc has been a ‘given’ for the populous at large. But governments are looking for other solutions – apart from cost cutting - to create long-term growth and sustainable jobs. Market liberalisation is inevitable, though its benefits may take time to flow.

New Zealand enterprises watch the global scene with trepidation. As Alan Bollard said recently (quoted in a Newsweek Special Edition): “When elephants make love, or war, the grass gets crushed, and that’s the risk smaller economies face in this situation.” Things could get worse, or we may continue to wallow.

There will be heightened pressure on the public sector to continue to provide superior levels of service with fewer resources. Government agencies and their senior management teams will be under increasing pressure to reduce costs as the primary (and perhaps only) source of reinvestment. This scenario has been commonplace in the private sector for some time, however some lag in the public sector is of concern.

How well individuals and populations continue to adjust to an even more rapidly changing environment will be the determinant of success in 2011. Lesson One – Assume Nothing! Lesson Two – Watch and Learn from How Governments Respond.

For New Zealand the urgency of continuing to forge strong trading relationships with Asia and other parts of the world will dominate public and private sector thinking next year. We have a competitive playing field, thanks to the new trade agreements. Our value in terms of ideas, products and services will require greater definition and support as we work our way toward leveraging those opportunities. More effective and ambitious trade/export organisations in the private and public sectors will need to look forward in addressing our productivity and profile as a global trading player.

New Zealanders are by nature reticent. If we are not able to re-orientate this part of our national trait then our adaptation, and therefore success, will be less than complete. There are big implications in these trends for the competency of leadership at all levels of our political and commercial environments. For a start, the quality of the relationships between political and commercial leaders will be increasingly important. A recent McKinsey report talks about “the rise of the market state”, in which governments play a more intrusive role in the economy. That will force CEOs and leaders to spend more time “partnering” with government.

In addition, leaders will need to get better at adapting to change, which comes from multiple sources - from the sheer speed of progress, from market shifts and innovations, from technology, and from mergers and acquisitions. The environment demands multi- faceted leadership qualities, to ensure that you can engage and take others along with you. It requires skill and courage, in addition to considerable effort. Leaders need to be true team players who can cope well with complexity, and stress. They need resilience, and a high level of personal and commercial maturity.

One thing that won’t change is that the shortage of leadership talent in New Zealand will continue. There are simply two few opportunities for leaders to gain experience in organisations of scale in this country. Although the global financial crisis has brought caution and less movement, as the market improves there will be increased pressure to ensure that strategies are in place to manage and develop key talent. This is a core means of retention of good people, who will have more and more attractive options.

The development needs of mid-managers, in particular, will need to be in focus, for the critical role they play in executing strategy, and motivating the frontline. A study by our global HR partner, Development Dimensions International (DDI), has identified a “gloom spiral” at mid-management level, that if left unbroken, will inhibit organisations’ ability to take advantage of growth opportunities. Despite the challenges, an attitude of optimism and confidence - that we can work well in an interdependent global environment - will ensure New Zealand can enjoy some growth and progress in 2011.