There is no doubt, that in these uncertain times, achieving a consistent level of ongoing business growth has become more challenging than it has been in the past.
Yet, as is often said, where there is a change there is also an opportunity. So, what are the main concerns facing organizations today?
Let’s face it, most of us feel discomfort with uncertainty. What makes it worse, uncertainties tend to come along like buses, not one at a time, but all at once. So, we get uncertainty in the financial markets, uncertainty with new regulations, uncertainty with Brexit, uncertainty with the political landscape, uncertainty about what competitors are doing, and uncertainty about how new technology will affect the business, all coming along at the same time.
The fact is that there is a never-ending list of uncertainties. The trouble is, whenever we get a big batch as we have at present come along, it leads to a short-term focus. Companies shy away from long-term planning in favor of short-term results, stating uncertainty as the excuse. While this might feel safe, the failure to strategically plan ahead often ends up with even more uncertainty as lack of future investment destroys long term value. The problem to be solved, therefore, is to balance the need for a more reactive, short-term focus with the need for informed, long-term strategies.
In interviews conducted by the Lean Methods Group, CEO’s from seven of the ‘Top 10 Fortune 500’cited the challenges of globalization and emerging markets taking an ever-bigger chunk of the pie as being their top concern. Based on this, the need to understand foreign markets and how they think has become more essential than ever. From the ability to penetrate new markets with existing products and services, to designing new products and services for new customers, to recognising emergent, disruptive competitors that only months earlier weren’t even known. The problem to be solved is to better understand international markets and cultures through better information gathering and analysis of what it all means.
Interestingly, research showed too and despite popular myth, that the majority of the larger companies were not looking to create more innovative cultures. It seems big companies are not happy with innovation and many industry leaders struggle with the idea of a more innovative culture as it appears too frightening to them. The problem to be solved is how to become more innovative while still maintaining focus on core business and a sense of control over the organisation.
4. Government policy and regulation
A changing regulatory environment is always of concern to business, but uncertain energy, environmental and financial policies are complicating the decision making for nearly all companies today. It’s true that many organisations have come to terms with the likes of changing data security policies, but the concern over how European regulations will (or will not) be faced, with the UK being outside the EU is simply unknown. The problems to be solved are to understand the meaning of how regulations and government policies will affect your industry, its implications for your business, and then to develop the skills necessary to deal with them.
The pace of technological improvement is running at an exponentially increasing rate. While this has been true for several decades, the pace today makes investment in technology as much an asset as a handicap because a competitor may wait for the next-generation (and less expensive) technology, which may only be a year away, and then use the lower price and ironed out problems, to achieve the advantage. Of course, waiting to be that competitor can be equally risky. Similarly, the ability for even the best of technologists to stay informed about emerging technology is in conflict with the need to gain the initial benefits and investment from the company’s current technology. The problem to be solved is to develop a long-term technology strategy while remaining flexible enough to take advantage of unforeseen technology developments.
A particular subset of human capital planning is found so often in our research that it is worth its own mention. Diversity brings many challenges, as it makes it far more likely that people do not agree, and the lack of agreement makes running a business very difficult. At the same time, the lack of diversity within many large company leadership teams leads to a narrow view of an ever-changing and diverse world, contributing to groupthink, stale culture and a tendency to live with the status quo for too long. The problem to be solved is to first define what diversity (and not just recommended quotas) really means in your organisation, then promote the expansion of differing ideas and viewpoints while ensuring a sufficiently cohesive environment that efficiently gets things done.
There’s no doubt that life and business have gotten more complex, even as certain tasks and activities have become easier due to information technology. The pace of change is quickening. The global economy is becoming still more connected, creating a much larger and more diverse population of customers and suppliers. Manufacturing and services are increasingly targeted at smaller, specialised markets due to the flexibility that IT provides in these areas. The 3D printing revolution is a perfect example. We know from past experience that the patterns of evolution tend to become more complex as they evolve before becoming more simplified. The problem is how to develop better and more systematic ways of thinking, so you can design your business models, processes, products and services in a way that minimises unnecessary complexity.
8. Data overload
It is said that the only true constant is change, and in today’s world nothing is changing more or growing faster, than information. In March 2010 the estimate of global Internet traffic was just in excess of 21 exabytes (21 million terabytes). In 2016, global traffic reached 1.1 zettabytes (1.1 billion terabytes). In fact, every day, 2.5 quintillion bytes of data are created. The ability of companies, much less individuals, to consume and make sense of the information that is available (and necessary) to make good decisions is becoming an insurmountable challenge. The problem to be solved is to deal with this mountain of information with both technology and human know-how, then to convert this information into valuable knowledge.
9. Supply chains
Because of uncertainty in demand and the need to stay lean, companies are carrying smaller inventories than ever. At the same time, uncertainty in supply, driven by wildly changing commodity prices, an apparent increase in weather-related disruptions, and increasing competition for raw materials make supply chain planning more challenging than ever. Smaller suppliers that, five years after the global financial crisis, still struggle to get the credit they need to keep up with their larger customers’ demand exacerbates an already unwieldy situation. The problem to be solved is to develop a supply chain strategy that not only ensures the lowest costs, but also minimises the risk of crippling supply chain disruptions.
10. Strategic thinking and problem solving
It is the lack of a well thought out and strategic approach to information acquisition, analysis, and development based on a unique insight that leaves many companies at a disadvantage. They fail to have a long-term strategic imperative and so instead jump from one strategy to the next on a year-to-year basis. This has a direct impact as everyday problem-solving competency among business leaders also limits their ability to adequately deal with today’s challenges. This too is why so many companies tend to jump from one thing to another, depending on which particular fire they are trying to put out. In many cases it’s the fast-changing business environment that ignites these fires in the first place.
So how can this problem be solved? The answer really is by ensuring that there are the resources in place to be able to understand and navigate the future. The importance of this because cannot be overstated as any company that wants to be successful must resolve now, how they will implement strategic thinking and problem solving for the future.