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n the era of widespread system failure and multiple departures from tangible and intangible anchor points, it is high time conceptually to hoist the blue Peter. Leaders should abandon fragmented, rigid, and static mental models and instead resort to what I call “nexus cogitation.”

This is a holistic and dynamic form of deep and careful reflection, meditation, and contemplation about causal relationships across various segments at different levels of granularity, which prepares the mind for sea change.

Two concepts in particular stimulate this special mental activity. “Saw wave theory” promotes thinking in terms of jagged development paths.

The components of the “global-Asian nexus,” which also have teeth, interact like corresponding cogwheels (see illustration, entitled “Transmission of force inside the global-Asian nexus”). In the case of the global-Asian saw wave nexus, the interaction between trends in Asia and the rest of the world is associated with major ruptures.

Geographic nexus cogitation

Of course, Asian countries vary in the degree of openness and concomitant permeability. Singapore, for example, is more exposed to fluctuations in global trade than other Asian nations.

But no country in Asia is immune from global shock waves; holding other things constant, survival and prosperity always depends on what happens elsewhere in the world.

The optimal balance between shaping pivotal global trends and adapting to them is perennially shifting—depending on the capacity and will to change and be changed, coupled with the expediency to so.

It is often very useful to view key developments in the East and West from a global-Asian perspective, since it helps to assess appropriateness and thus, ceteris paribus, enables leaders to make the right tradeoffs in the course of this delicate balancing act.

Winning the global-Asian game

You cannot succeed in the game of chess if you do not ponder the future moves of your opponent. It is helpful to express this insight in technical terms.

You need to appreciate dynamic complexity, resulting from the reciprocal influence between players, which differs from detail complexity, referring to the number of system elements and their possible combinations.

The same principle applies to other contexts with contest features. In particular, fathoming the interplay of action and reaction is vital in order to truly understand the vibrant global-Asian saw wave nexus.

For example, competitive measures taken in Asia are bound to trigger countermeasures, such as aggressive pushback, in other parts of the world.

In many instances, opponents learn from each other. For example, the stellar rise of Japan prompted Americans to intensively study the Japanese management model and emulate best practice from Nippon.

In fact, one prediction of saw wave theory is that nations will ultimately rise from the ashes if the seeds of greatness still exist.

A global comeback of the West, which is likely to affect Asia, is feasible. As long as the US keeps attracting the best and brightest, it will be able to restrengthen its competitive position in the race with China, for example, potentially leading to losses on the Chinese side.

Germany is another candidate that will reemerge as a powerhouse on the world stage if it effectively removes international constraints and solves its domestic problems, above all ineffective structures, systems, and processes that inhibit leadership and cause other damage.

In the future, global imbalances, which are partially increased by heavy-handed policy interventions, will result in the accumulation of strong tension and pressure.

These make it increasingly likely that ruptures occur, which restore the equilibrium. For instance, it is unlikely that China can keep building up its foreign currency reserve indefinitely to keep the Renminbi artificially low.

The problem may either lead to transformational damage internally, or countermoves could dislocate
the reawakened giant from its trajectory. Likewise, the inroads of Asian players into Western markets are likely to provoke strong hostile reactions, possibly in the form of protectionism.

Ruptures are not limited to the economic sphere, though. In the course of the larger power contest between Eastern and Western nations, even disruptive military conflicts, possibly occurring on third-party territory, cannot be excluded.

Given that the interrelationship between action and reaction is so vital in the global-Asian saw wave nexus, it is worrying that many leaders do not view their action in a game context, failing to anticipate pushback from some parts of the socio-economic system in which they operate.

Recent changes in saw waves

In the postmodern era, sawtooth waves have taken on a new quality in many settings. The amplitudes oftentimes have increased. Besides, the sawtooth waves have become compressed, with dramatic reversals occurring at shorter intervals.

Take the example of the Electronic Manufacturing Services (EMS) industry, which in three years went on an amazing rollercoaster ride with important global repercussions in other industries.

In 2007, the industry outlook was bright, and companies were justified to set very ambitious growth targets. But then suddenly business plummeted because of the global financial crisis.

Japanese OEM companies reoriented themselves and reduced their business with EMS companies drastically. One Asian EMS player decided to lay off about 50 percent of its workers.

Afterwards, business started to pick up again. But in 2010, new mighty thunderbolts struck. Taiwanese electronics maker Foxconn, which is China’s largest exporter, encountered a grave crisis after several employees committed suicide in its China operations.

The location with the highest number of fatalities was Shenzhen. There, in a single plant, Foxconn employs over 420,000 people — representing almost 50 percent of its total workforce worldwide.

As a consequence of the tragic incidents, management decided to raise the wages of its assembly line workers in Shenzhen by 70 percent.

If the wage increase spreads, it becomes doubtful whether China can sustain its position as a low-cost manufacturing platform for a long time.

One key reason for the dramatic change in the postmodern sawtooth wavescape is the increasing connectedness of regions, countries, sectors, and people, coupled with revolutionary technological advances.

In particular, there is now strong leverage in the global system. In many instances, a few influential players with worldwide reach, such as global media tycoons and financial mavericks, have the potential to shift the needle.

Given the strong international linkages and fast transmission mechanisms, a new spike in the saw wave can easily occur.

This then provides the stimulating contrast for radical departures from the recent past, culminating in a further spike. The resulting long-term development trajectory exhibits the characteristic zigzag pattern of a saw wave.

Time again, I found that Western executives in particular find it hard to imagine sea change in Asia.

The new discipline of nexus cogitation in the geographic realm and other fields helps to break through ossified mental maps, connect the dots, discover dynamic effects, and prepare for a future that may differ radically from the present.

[This is the sixth part of Prof. Kai’s series on the “Saw Wave Principle”] Prof. Kai on Strategic Leadership Column Number 47. Kai-Alexander Schlevogt (PhD Oxford), a former professor at the National University of Singapore (NUS) Business School, is Area Editor, Asia-Pacific, of Performance (global journal published by Ernst & Young). His latest book is Brave New Saw Wave World (ISBN: 978-81-317-5403-0). Email: schlevogt@schlevogt.com; website: www.schlevogt.com