Two days ago at Davos, Canada’s Prime Minister delivered a blunt diagnosis.
The “rules-based international order” is over. It’s now a “pleasant fiction.” Middle powers can no longer assume the old architecture will hold. “If you are not at the table,” he warned, “you are on the menu.”
His prescription: stop relying on what worked before. Diversify. Build coalitions. Create strategic options before you need them.
Carney wasn’t just talking about nations. He was describing adaptation debt—and what happens when you ignore it too long.
Why Carney Has Standing to Say This
This isn’t Carney’s first time diagnosing systemic risk that others would rather not see.
As Governor of the Bank of England, he stabilised markets the morning after Brexit—appearing on television while the pound crashed to confirm £250bn of liquidity was ready. That intervention is widely credited with preventing an immediate financial crisis.
He created the Task Force on Climate-related Financial Disclosures (TCFD), forcing banks and insurers to measure their exposure to climate risk. For the first time, institutions had to account for the gap between their vulnerability and their preparation.
That gap has a name. It’s adaptation debt. Carney made it visible on balance sheets before most leaders knew what to call it.
He was criticised for warning that Brexit would damage the economy. His opponents called it “Project Fear.” Many of his predictions—the falling pound, rising inflation, stalled business investment—came true.
He was criticised for being an “unreliable boyfriend” on interest rates. But central bankers who act decisively to prevent crises get blamed for the crises that didn’t happen.
Mark Carney, the Governor, was a manager of risk who was hated for pointing out the house was on fire.
Mark Carney, the Prime Minister, has positioned himself as the architect of the rebuild.
The Evolution: From Diagnosis to Action
At the Bank of England, Carney had to maintain institutional neutrality. He could warn. He couldn’t act beyond his mandate.
At Davos, there was no hedging. No forward guidance ambiguity. He called the old order a “lie” and described the “brutal reality” of great power rivalry.
The same trait that made him controversial in Britain—insisting on economic reality over political wishful thinking—is now the central doctrine of his foreign policy.
This is what leadership looks like when you stop deferring the diagnosis and start servicing the debt.
What Is Adaptation Debt?
It’s the gap between how your organisation currently operates and what your environment now demands.
Every time you defer a necessary change—because it’s uncomfortable, expensive, or politically difficult—the debt grows. Like financial debt, it compounds. Unlike financial debt, it stays invisible until it isn’t.
Carney named it at national scale: decades of middle powers operating as if alliances would hold, trade relationships would stay stable, and the rules would apply equally to everyone.
They didn’t build strategic optionality. They didn’t maintain the infrastructure of independence. They borrowed relevance from an architecture that was quietly crumbling.
Now the bill is due.
The Organisational Parallel
The same dynamic plays out in boardrooms every quarter.
The pressure builds:
- Legacy systems that “still work” but block agility
- Decision processes designed for a slower era
- Talent strategies based on yesterday’s market
- Cultural assumptions that no longer match reality
The surface holds:
- Metrics still look acceptable
- Competitors haven’t disrupted yet
- The board isn’t asking hard questions
- “Transformation” is on the roadmap (for next year)
Then the surface cracks:
- A new entrant changes the game
- Regulation shifts overnight
- A key dependency fails
- The talent you needed has already left
This is the Minsky Moment. The transition from “completely stable” to “total chaos” happens faster than anyone expected. There’s no gradual decline. Just sudden repricing of everything you assumed was solid.
The Five Behaviours That Create the Debt
Adaptation debt doesn’t accumulate by accident. It’s created by specific leadership patterns:
- Avoiding discomfort. Steering around hard conversations. Smoothing over conflict instead of surfacing what’s stuck.
- Clinging to outdated success formulas. “This is how we’ve always done it” as justification. Doubling down on legacy when the evidence says pivot.
- Centralising control. Every decision escalates. Local learning gets throttled. Experimentation becomes expensive and slow.
- Neglecting governance clarity. Strategy says one thing. Incentives say another. Decision rights stay undefined. Nothing actually changes.
- Overloading the system. Too many initiatives. Too little capacity for reflection. The organisation is “too busy” to adapt—which guarantees it won’t.
Carney called out the national version: nostalgia masquerading as strategy. Hoping the old order would return rather than building resilience for the one that would arrive.
The Diagnostic Question
Carney’s speech works because he named the rate mismatch.
The world is changing faster than Canada’s strategic assumptions are being updated. The gap was invisible while the architecture held. Now it’s not.
For your organisation, the question is the same:
What’s your rate?
- How quickly do you sense shifts in your environment?
- How fast can you commit to a strategic pivot?
- How rapidly can you reconfigure operations when conditions change?
- How resilient are you to shocks you didn’t prevent?
The tightest constraint sets the ceiling. If your decision cycle is 18 months but your market moves every 6, you’re accumulating debt whether you see it or not.
The Leadership Choice
Carney spent years as a central banker—warning of risks, building frameworks, getting blamed for fixing problems before they became catastrophes.
Now he’s not just diagnosing. He’s building.
That’s the shift adaptation debt demands. At some point, you stop being the manager pointing at the fire. You become the architect of the rebuild.
The debt is already there. The question is whether you service it now—through deliberate action and strategic optionality—or wait for the Minsky Moment to choose for you.
Carney stood before a global audience and said, “The rules have changed.” Hoping they’ll change back is not a strategy.
Where is your organisation borrowing relevance from an architecture that’s quietly crumbling?
Adaptation debt compounds. The cost of waiting isn’t linear. It’s the capability you didn’t build, the options you didn’t create, and the distance your environment gained while you stood still.
What’s your rate?
Continue Reading
This is the first in a series on adaptation debt.
Borrowed Relevance: The Debt You Can’t See Until It’s Due A deeper look at how organisations accumulate dependency on architecture they didn’t build and can’t control—including a tale of two firms that made opposite choices.
Futures Mode: Why Capabilities Built in Calm Cost Less The response to adaptation debt. How to move from Reactive Mode through Diagnostic Mode to Futures Mode—and why most leaders need to make two jumps, not one.
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