Insights on Global Markets, AI Disruption, Corporate Reputation, and Strategic Risk Management
Welcome to the inaugural edition of Montieth & Company’s “Six Critical Questions”, a new insights series that looks at the most important trends and developments impacting organizations across sectors and money and media markets. Each edition combines our management advisory, strategic communications, and reputation risk expertise to help leaders navigate complex challenges.
Each issue features commentary from an expert at Montieth & Company offering deep marketing communications and PR insights.
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Are we heading toward an AI-driven market bubble? What should organizations expect?
I’ve been through five recessions in my professional life, and all have resulted from some kind of shock, whether a sudden and dramatic increase in the price of oil and runaway inflation (1979) or the collapse of the financial markets (15 times in the last 100 years). Since 2000, there have been four bear markets, and what I see is that each new generation finds its way to make the mistakes of the prior ones when it comes to a nearly blind belief in the potential of some new asset class, combined with the assumption that stock prices will always go up.
Everything in my experience says there has to be a market “turn”, especially given the concentration of capital in the “Mag 7” tech stocks and how incestuous the major top market cap companies have become investing in each other’s AI initiatives. Combine that with the virtual absence of any regulatory oversight of the sector.
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What might that market shift look like in the U.S. and globally?
That’s the interesting bit. The Great Recession resulted in the establishment of a lot of shock absorbers, from more careful interest and inflation rate management by the Fed to more Federal regulatory and law enforcement compliance rigor. My biggest concern now is that much, if not all, of that infrastructure is being dismantled and leadership in Washington, D.C. doesn’t really care about the outcome. Even basic economic indicators like jobs data are not being released, and that’s only the tip of the iceberg.
All this suggests that whatever sparks the shock will make the impact even more damaging and extensive. Robert Kagan’s “The Jungle Grows Back: America and Our Imperiled World” offers insights into why these systems matter, not just domestically but for global stability.
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How would a U.S. market shock affect other major economies?
Even as the U.S. becomes more economically isolated through tariffs and political shifts, any major disruption here would likely affect international capital markets. The U.S. dollar is still the global reserve currency, and Treasury securities are held by just about every major country in the world. It’s hard to imagine, though, that a meltdown here won’t spread to other major capital markets. Money is global, which to me has always meant capital investing is highly integrated around the world.
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What does this mean for corporate reputation, crisis planning, and communications strategy?
I once wrote a think piece called “Ditch the crisis plan.” The idea was that most companies don’t create crisis plans and when they do these are largely perfunctory exercises that gather dust on the shelf. No battle plan survives the first day of war, which paraphrases a famous dictum of a late nineteenth-century Prussian field marshal.
A new rigor has to be applied to crisis planning and it has to consider how just about any bad news goes viral instantly, making message control nearly impossible.
Issues management and crisis communications now require:
- Preparing for real-time responses that stay on message
- Anticipating the cycles of social media-driven storms of opinion and vitriol
- Accounting for misinformation and disinformation
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How should organizations prepare for the worst-case scenario?
Understand the core interests and needs of your stakeholders and presume nothing. Don’t see it as managing perceptions. First, understand what people really care about and why. This perspective is shaping for us what we call our critical issues predictive analysis toolkit at Montieth & Company, and clients really value it. With today’s technology, anticipating sentiment and reputational risk is easier, faster, and more accurate than ever before.
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What is one major risk organizations are overlooking right now?
It’s what I call figuring out how to master the transformation algorithm. All organizations go through some kind of transformation, whether slow and gradual or sudden and small or large-scale. Every company should spend far more time formally understanding what they’re doing to not just succeed but to make improvements and to make the change stick. This should start with the most uncomfortable decisions and changes that you can reasonably expect to have to make.
For example, look at all the DEI initiatives that were put in place by so many companies, many of which, on the turn of a dime, dismantled them or just kept silent about their benefits. The pressure to do that was wholly predictable. Thinking that through and being ready to say why DEI is still important, even at a cost, would have saved a lot of damage to the reputation of so many organizations. It all goes back to sticking with your beliefs and values. Never wavering. When you turn against them, you lose stakeholder trust and confidence.