The underpinnings that have sustained corporate growth for many of the previous decades are eroding, and many truths are starting to unravel. The emerging business environment is both increasingly uncertain and ever more competitive, and coupled with the emerging competition from new markets it would be easy to form a narrative of decline for western companies. The rules of business are changing and those failing to notice will perish.
For those not wedded to previous, and perhaps current, ways of doing things, the future holds great promise. The rise of the global consuming class is set to undergo a rapid expansion by 1.8 billion by 2025, by which time global consumption is expected nearly to double, to $64 trillion and global revenue could increase by more than 40%, to $185 trillion[i]. New industries, new markets and new sources of consumption – as well as changes within the type of consumption in core markets all offer opportunities to innovate and carve new value propositions.
Cynics would be correct in pointing out that much of this growth will go to emerging market competitors and that emerging market competitors will increasingly pose a challenge in many western companies’ home markets. The blurring of industry boundaries, and corrosive power of technology companies that allows quick implementation of data rich sets and cost structures onto a range of industries add an additional dimension to competition, as well as providing new opportunities for those agile enough in thought and action. The opportunities for entrepreneurship, partnering, collaboration and disruption are all significant.
Through both emerging market competition and digital vectors the challenge is clear – the relative decline of the large western corporation will exert even greater pressure to innovate and increase productivity just to survive, let alone thrive. Any relative decline could also lead to a fundamental rethink on some long standing assumptions of what factors make for a successful business. In fact, new business processes and models will be needed in conjunction with root and branch cultural renewal for success to be achieved en-masse. Board-level technology competency and direction is a matter of urgency (and one that will be addressed in a future GFF blog) and the platforming of key business processes could help create increasingly competitive companies more capable of success in the global digital economy. It also likely that the forces convulsing labour markets could someday lead to a rethink on the role of business and its place in society.
The combination of demographic, geopolitical and stage of consumer development that helped propel steady economic growth in western economies can never be repeated, and neither should the organisation models that emerged as a result of these conditions. New models are not a ‘nice to have,’ they are essential. This means actively disrupting your own model before a data rich competitor or emerging market competitor (from within or outside your vertical) does it for you. Bleeding edge may not be desirable but neither is disruption and in some cases, the comfort zone between the two is decreasing. Those agile enough to inhabit this evolving ground could well post revenue and profits that help redefine the ‘golden age.’