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How to Survive Disruptions
There are fads and there are trends. Fads are temporary events
that come and go. They do not create a
lasting impact on our lives and our lifestyles. Trends on the
other hand, have more lasting impacts on
how we live and work.
According to Hay Groups research, there are six megatrends
trends that have broad and dramatic long-term impacts on a global
scale observed over decadesthat are fundamentally transforming the
global
business environment. These megatrends are making an already
disruptive business environment more
dynamic and uncertain. The six megatrends are:
1. Globalisation 2.0: Economic power shifts from the West to the
East and a new global middle class
emerges, fragmenting markets and intensifying competition.
Companies that could serve a more diverse
set of preferences and win the loyalty of these new consumers in
emerging markets in Asia would be
better placed to compete in the new business landscape. In Asia,
leaders are having to learn how to
manage in new markets as their companies expand westward.
2. Environmental Crisis: Sustainability becomes
business-critical. Firms will need to overhaul their
operating models as environmental concerns move from CSR to the
bottom line. Its no longer nice to have
CSR goals but the tools to engage employees, interests of
communities and expectations from consumers,
politicians and interest groups. Success is increasingly
measured by a triple bottom line that goes beyond
just financial profit, they include environmental, social and
economic considerations.
3. Personalisation and Individualisation: Personalisation and
individualisation promotes freedom of
choice; and freedom of choice erodes customer and employee
loyalty. Work is increasingly structured
around employees life through part-time, work-from-home,
flexi-hours and other kinds of work
arrangements. A contingent workforce is also on the rise as job
security and the demand for more personal
time increase. In addition, employees belonging to Generation Y
and Millennial generations (born after
1980 and 1990s) are more concerned with work-life balance,
corporate culture and autonomy than salaries
and career paths.
4. Digitisation: Ubiquitous Internet connectivity, the
proliferation of digital devices, and the rise of social
networks will continue to blur boundaries between work and
personal lives aswork and the workplace go
remote.
5. Demographic Change: Different parts of the world will face
divergent demographic challenges.
Aging populations in selected markets in Europe and Asia will
reshape the workforce profile and
intensify the war for talent as skill shortages emerge and
grow.
6. Technological Convergence: A powerful technological shift is
just around the corner and set to
transform many aspects of our lives from medicine and nutrition
to energy and production. CEOs must
decide which technologies have the highest risk or the
greatestbenefits.
What do these six mega trends mean for businesses? Taken
together, businesses need to operate
differently by catering to multiple stakeholders, adopting
innovation in technology and services,
addressing specific demands for the current and future business
imperatives. Only then can businesses
confidently plan a sustainable business roadmap that utilises
current and future capabilities. To do that
effectively, they need to take the following into account when
mapping new strategies:
a. Learn to manage more stakeholders:Businesses will get harder
to manage as there are multiple
vested interests that business leaders need to consider. Leaders
must be sensitive to the expectations of a
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rapidly expanding network of stakeholders, and need to
legitimise their relationship with the wider
society in which they operate.
b. Accept a power shift from business leaders: The requirement
to satisfy a range of stakeholder groups
shifts the leaders power to their various stakeholders, reducing
their authority to lead organisations
through the challenges at hand. They need to rely more on
influence and persuasion rather than authority
to get things done. Business leaders have to deal with a reduced
authority to lead and be comfortable withthis.
c. Adapt to new working practices: A new social practice of work
will emerge as work and the
workplace go mobile and people are expected to be contactable
and responsive to requests. Thus, the
boundaries between personal and professional life, and a
resistance to formal authority take hold. Firms
have to ask themselves if getting employees to work from home
will help them reduce travel costs and
office overheads and, in turn, reducing operating costs and
lower the environmental footprint.
d. Understand and be prepared for cost escalation:Due to the
scarcity of talent, natural resources and
use of new technologies, businesses costs will
mushroom,businesses need to develop and deploy highly
advanced technology and meet the demands of globalisation.
e. Ethics becomes more important than ever:News travels faster
than ever, being easily and readily
shared via the Internet and social media. Firms and leaders are
under greater scrutiny, and this calls for
the highest ethical standards because news is shared. Societal
concerns over ethical business practices, the
environment and new technologies, combined with the transparency
of the digital era, will be more
pronounced than ever.
These are exciting times for businesses. With competitive
advantage constantly eroded, business leaders
have to find new ways to ride of the waves of megatrends to
their advantage instead of getting
steamrolled by them.
To remain successful, businesses have to constantly scan the
environment to remain relevant. They seek
synergies that lead to more revenue, margin and sustainable
growth. Understanding how megatrends
impact them would be a start.
Dr Thomas Goh is Hay Groups Director, MNC Sector and Chairman of
a think tank. He is a veteran
consultant who has helped companies innovate and change to be
more successful.
