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A Crisis of Legitimacy

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A Crisis of Legitimacy

Today’s toughest global challenges are unintended consequences of yesterday’s success. If our prevailing institutions can’t adapt, they could lose the right to lead.

Strategy+business,

5 min read
7 take-aways
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Societies depend on functioning institutions, but all around the world, people are losing faith.

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Every modern society depends on institutions – financial, governmental, educational, legal – to provide services necessary for its functioning. But around the world, these institutions are losing their footing as broad social and technological trends shake their foundations. In a sweeping article for Strategy+business, Blair Sheppard, PwC’s global leader of strategy and leadership development, and Ceri-Ann Droog, a director with PwC UK and thought leader in global strategy and leadership development, describe the emerging challenges and dilemmas for institutional leaders around the world.

Summary

As a result of five trends, people worldwide are questioning the legitimacy of their institutions.

Despite the achievements of global institutions – the reduction of poverty, for one – citizens are questioning institutions’ legitimacy and even whether they should exist at all. People are holding businesses to higher standards of social engagement, and they’re losing faith in the competence and motives of governments, corporations, the media, schools and religious bodies. Leaders can’t ignore this crisis. If unaddressed, it could lead to broad political and economic breakdowns.

Disparities in wealth distribution are causing insecurity among the middle class.

Wealth disparities root in two main factors: jobs moving from high- to low-wage economies and the increasing share of productivity gains accruing to shareholders at the expense of workers. Wealth disparities then cause negative feedbacks, since they reduce the middle class’s ability to buy homes, reduce governments’ tax revenues and service levels, and expose the middle class to greater...

About the Authors

Blair Sheppard is the global leader of strategy and leadership development for the PwC network of companies. He is also professor emeritus and dean emeritus of Duke University’s Fuqua School of Business. Ceri-Ann Droog, a director with PwC UK, is a thought leader in global strategy and leadership development.

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