Five drivers re-shaping businesses and the world of work
We are living through extraordinary times. The whiplash pace of technological progress is ripping up the tried and tested ways of doing things. For some, this is an exhilarating leap into a brighter, more equitable and meaningful future but for others, it represents destabilising, polarising and worrisome times.
The unrelenting pace of technological change is affecting the way businesses operate, connect with customers, engage with employees and strategically prepare for the future. However, it is just one element of a wider shift transforming the world of work.
Here are five of the key drivers we see re-shaping the way we work, live and buy:
1. The surge of profit-with-purpose
As consumers are increasingly making choices that reflect their own socio, political and ethical values, businesses are responding by transforming the business model to one that is not solely focussed on profit generation, but equally driven by values and purpose. This takes us back to Simon Sinek’s ‘Start with Why’ questions about the central purpose of organisations.
Consumers in both the B2B and B2C sectors are becoming more forensic when choosing which companies to buy from, work with, and work for. Young people in particular are compounding this trend.
The Deloitte Millennials Survey 2017 showed that 76 percent regard business as a force for positive social impact. Interestingly, younger people believe multinational businesses are not fully realising this potential to alleviate society’s biggest challenges. As shown by their reaction to the Brexit referendum and subsequent jump in new voter registrations, this generation represents an important attitude shift in our society. Understanding their needs and expectations offers an opportunity we need to embrace.
Although profit-for-purpose businesses have been around for years, this consumer shift is gaining momentum and companies across the sector spectrum must adapt too; increased transparency through digital communication such as social media means they can’t simply pay lip service to ‘values’ but must show it and mean it. Uber is a case in point having recently publicised the company’s new ‘cultural norms’ stating that “the culture and approach that got Uber where it is today is not what will get [Uber] to the next level.”
Having a purpose beyond profit could reap other benefits too, creating a culture that attracts and retains talent, especially the millennials. A business which can prove it behaves in line with positive social/environmental values may also be considered a more attractive investment as it carries less reputational risk.
This leads to greater soul-searching amongst business leaders, who question how they measure value in their organisation to include non-financial metrics, authenticity of purpose and how the organisation’s brand values are perceived and tested in its marketplace.
2. The rise of crowds and platforms
The sharing economy – in which assets are rented and shared in preference to being owned – continues to gather pace, creating new strategic business collaborations. The sharing economy, showcased through brands such as Zipcar and TaskRabbit, is disrupting traditional vertical hierarchies and dismantling competitive barriers to entry. As a result, it is a catalyst for a growing number of businesses to form strategic alliances with groups driven by a common purpose, whether that is their customers, competitors or suppliers. Proprietary thinking is a thing of the past.
In the sharing economy, business models based on internet-enabled ‘platforms’ are proliferating, bringing together consumers and producers in marketplaces that require no physical assets, such as Uber and Airbnb. While not without their challenges, in a digital world these businesses are positioned for growth, able to respond quickly to consumer needs – and are here to stay.
Similarly, business models that harness ‘the crowd’ are another approach which is building momentum. According to Crowd Sourcing Week this phenomenon is best described as the “practice of engaging a ‘crowd’ or group for a common goal — often innovation, problem solving, or efficiency’ and ‘is powered by new technologies, social media and the web”. Internet-enabled platforms such as Kickstarter have provided a way of connecting interested individuals to fund and inform start-up projects, together providing the scale these projects need.
The food and retail sectors have been experimenting with crowdsourcing for some time. Examples include McDonalds, which back in 2014, asked their customers to submit ideas for the types of burgers they’d like to see in store. More recently, Amazon has developed its own crowdsourced same-day delivery service – Amazon Flex. More companies in both the public and private sectors are now following their lead, and is becoming mainstream across a broader range of industries.
In the digital age, rapid prototyping and real-time feedback from specific parts of the customer base will increasingly be embedded within traditional businesses, not just the myriad start-ups leaning on crowds to launch their venture.
3. New technologies
Technology is a change enabler as much as a change in itself. Automation, AI, and machine learning have become mainstream and are already re-shaping our everyday lives: Algorithms, not humans, decide what news we read. Netflix can work out what films you like to watch. Online retailers will serve you with products that complement your recent purchases.
We take all of this for granted, while the pace of technological innovation continues unabated. We’re on the cusp of a world in which driverless cars are commonplace on motorways, robots expand into non-manufacturing workplaces and personal biometrics (such as retina scanning, voice or heart-rate recognition) replace online passwords for security.
Although it is difficult to predict how future careers will be affected by such wide-ranging changes, the businesses that are willing to embrace and adapt to new technology have the potential to significantly increase innovation and productivity.
In many cases, this approach will require cultural change within organisations and a significant shift in mind-set and leadership. Existing and future skills will need to be reviewed and developed in line with the rise in automation and AI. This includes ensuring that the workforce can work in conjunction with AI, interact with it effectively and resolve potential issues that may arise because of it. This will have a knock-on effect on the way businesses are managed operationally, including areas such as hiring practices and training models - and this will likely be just the tip of the iceberg.
4. Geopolitics and the Populist rise
A new wave of Populism is sweeping through the developed world. Many argue that this is a backlash to the impact of Globalisation, which has seen technological progress create greater inequality between ‘blue collar’ and ‘white collar’ workers, and between the knowledge/service sectors and traditional heavy industry.
The resulting geopolitical uncertainty includes Brexit and European Union fragility (most recently with calls for Catalonian independence and the current political instability in Germany), the rise of the far right across Europe, the approach of the Trump administration and enflamed relations with Iran, North Korea and Russia.
This theme was at the heart of this year’s World Economic Forum in Davos. Economist Nouriel Roubini told participants: “We are moving into a world in which you have many great powers. These great powers either work together, or there will be increasing frictions and conflicts on trade and currency, on economics and finance.”
This geopolitical shift could have a huge impact on investment and wider strategic decisions for many businesses. If companies do choose to expand globally, political regimes may have a greater influence on growth plans with favourable regulations moving down the priority list in influencing M&A decisions.
However, while Populism may be more reminiscent of the post-industrial 19th Century, business doesn’t stop and leaders can’t revert to models of the past. They will need to learn how to walk the fine line between political reality, including protectionism, and building innovative businesses that can thrive in the post-digital world.
5. The global, mobile workforce
Businesses already know that a well-designed workspace environment improves performance, creativity, speed of innovation, and builds a healthy culture. This has an immediate impact on attracting and retaining the talent needed to remain competitive. But with the wider shifts in the world of work, there are deeper implications for the space we occupy and the working practices we employ. Culture, technology and workspaces will need to work in harmony to meet the needs of future employees and those needs require better definition.
A younger workforce and the disruptive, innovation-driven nature of business could turn physical environments on their head and will question the need for ‘traditional offices’. Collaborative workspaces or sector specific hubs will move up the priority list. There will also be a renewed focus not only on the benefits and value of a physical building itself, but the wider areas and in some cases, cities as a whole.
Employees will increasingly expect – and need - technology that makes their lives easier and more productive. Traditional office hours structured around factory work needs a dramatic re-think to harness the productivity of a mixed global, mobile and virtual workforce. Connectivity and agility will be key, supported by a culture that embraces more flexible working models to offer a higher overall quality of life.
A more dispersed and flexible workforce can open up opportunities for businesses, but there will be challenges too, not least around regulation and the employee. As highlighted by the recently published Taylor Review of modern working practices, there are issues behind ‘gig work’ that need to be addressed and will affect how some businesses are run now and in the future. The expectations of current and future employees will need to be considered more carefully. This could affect talent strategies including the way in which organisations attract, retain and engage their staff.
Effective leaders are already acting
The business world is experiencing paradigm shifts driven by unprecedented changes linked to new technology, the needs of our employees, and global politics. Sustainable businesses know only too well that the only meaningful strategy is to embrace and adapt.
The Pandora’s Box of technological, social and political change has already been unleashed. Business must continue to evolve in response and business leaders must learn how to evolve their own mind-sets, question their organisations’ purpose and values, and embrace change in such a way that they respond positively, productively and competitively.
So now is the time to act – to step back, evaluate our position and learn how best to prepare our organisations and manage the key drivers affecting the world of work.
Introducing the Zebra Project
On 18th January 2018, we will be launching a new initiative to support and guide other entrepreneurial firms seeking to manage both the opportunities and challenges that the ever-changing world of work presents.
We invite business leaders to be part of the Taylor Vinters’ Zebra Project, to join us and each other to discuss and co-create some of the responses to the changes we face.