American baseballer, Yogi Berra, is credited with the quote that “the future ain’t what it used to be”. Unlike past generations, today we see forecasts of the future as simultaneously mesmerising and commonplace.
On one hand, we witness and wonder at transformative technologies—not only social media and telecommunications technologies, but robotics, genomics, nano-materials, brain plasticity, 3D printing, and mobile digital everything. On the other hand, the rapid pace of change has become the norm for businesses, so the massive adaptations made to the way businesses operate seem unremarkable. Consequently, the management agility and workforce skill involved is routinely underestimated.
To avoid the risk of missing the opportunities or being blindsided by disruptions that the future can bring, it is important to appreciate the emerging and enduring forces of change likely to have most impact on the way businesses can compete and proper.
From the breadth of research and commentary on future trends and thinking, here are five profound forces of change on which businesses can capitalise.
1. Advances in technologies transform entire business models
The importance and the power of the internet, digital and information and communications technologies and the rapid rise in computing power and its applications across all industries is well-recognised. But what matters is not the technology itself, but the game-changing transformations that it enables.
These technology advances enable entirely new business methods and offerings, fresh capabilities for meeting customer needs and providing greater value in customer experiences, and additional ways of earning a premium from doing so.
This is a platform for businesses to innovate, not just in new products and processes, but in their business models, ie the recipe by which they create value for their customers, suppliers and themselves.
Examples of business model innovation include low cost airlines, self-serve online travel and accommodation services, digital photography, and the convergence of mobile phone, music and computing devices.
2. The rise of the knowledge economy is real, pervasive and powerful in creating a competitive edge
The knowledge economy is not a cliché. Knowledge is central to competitiveness, as never before. The knowledge economy is not just restricted to high tech sectors or to workers with high level technical, analytic or conceptual skills. It is an attribute embedded across all industries and economic activities.
Knowledge is increasingly the key input into the production process, at least as important, if not more so, than capital and labour. Knowledge is a vital intangible asset that grows rather than diminishes with use. But as change accelerates, knowledge as an asset depreciates and must be replenished.
More often than not, we emphasise the stocks of knowledge held or created by firms (eg R&D, patents, IP), when in fact it is their access to flows of knowledge that is critical. Drawing on sources of knowledge outside the firm is vital.
How well firms are connected into the latest flows of knowledge, and how proficient they are at absorbing it and collaborating to turn this knowledge into fresh competitive capabilities is key to their long term success.
Enterprises can create a distinctive competitive advantage by the way they recognise, create and mobilise their own sources of knowledge to produce products and services that customers value and want to buy.
3. Shift from mass production to customisation and personalisation
Mass production has been a fundamental feature of business and industry since the Industrial Revolution. It no longer holds.
The transforming power of advances in information, communications and networking technologies is driving a trend towards empowerment of the customer and consumer.
Niche, customised products and services are the norm, not standardised mass production. In fact, the change is not just ‘one size fits all’ products, but tailored and targeted services and solutions. Learning from customers and partnering with them to meet even unexpressed needs is a feature of the shift to customisation.
Customers are moving from being searchers and viewers of information to the creators of content and the designers of their own personalised and customised solutions and services.
The trajectory moves from mass production, to mass customisation, to personalised solutions, to customer partnership and control.
4. More opportunities from changing patterns of globalisation
Globalisation is hardly a new trend, but its patterns are changing. We are witnessing shifts in geopolitical power and more complex and varied opportunities for engaging and doing business globally.
Global trade goes beyond traditional exporting. Increasingly, the trend is towards unbundled global production and supply chains with different specialist functions distributed around the world. This opens up wider opportunities to specialise in niches in these global value chains, without having to own and operate the entire international trade effort.
Examples of the variety of approaches to international trade include offshoring manufacturing facilities, but retaining design, R&D, marketing or administration functions; selling the knowledge not the product; or acting like the conductor of an orchestra by managing the acquisition, assembly, collaboration and delivery of different business elements from around the world into a coherent credible offering from home base.
This allows smaller enterprises, irrespective of location, to participate in virtual business units that span national borders and become in effect, micro-multinationals.
5. Changing working life
The reality is that working life is simply not homogeneous and stable, but being impacted by a complex array of forces for change.
Among the key changing dynamics, the following 6 themes stand out:
- The death of the job for life concept.
- Wider demands for greater work-life balance.
- Tougher social, environmental and ethical standards to be an employer of choice.
- Diminishing options for workers with low or obsolete skills or in declining regions.
- The intensifying war for talent.
- Whole new cohorts of workers with different perceptions and aspirations for their working lives, eg the global generation, free agents, ‘career step’ employees, portfolio or self-determined careerists, experienced ‘wisdom workers’.
The intersection between the five forces of change provides intelligence for businesses to use to chart their course for the future.