Businesses in the 21st century face new challenges- How should they react to this?
Demographic and technological trends are significantly changing the way companies relate to their competitors, suppliers, customers, shareholders and employees in the 21st century. As the 21st century approaches, powerful forces are transforming markets and dramatically changing ways of doing business. Increased movement of people, goods, and organizations across borders has resulted in the emergence of global market segments and the growth of globally integrated markets.
As a result, firms need to adapt and rethink strategies to respond to these globalizing forces, charting direction for future growth. The following article is designed to identify critical issues and provoke thought as to how businesses can best prepare to compete in the 21st century. In the 21st century, everything will be a matter of time. Velocity will dominate – any delay in making decisions could prove fatal in the fast-moving world of commerce. This puts a premium on a company’s ability to understand industries and technologies, and to analyze trends.
In fact, the biggest challenge for the 21st century businesses will be in assessing risk. This won’t be easy, particularly since fast decisions make for sloppy decisions. It’s not easy to change the thinking of traditionally minded people. Businesses that are too cautious will get left behind. In the new millennium, software rollouts and financial reengineering will be done in weeks, not years. Similarly, budgets and forecasts will take hours to complete rather than months. Investment decisions will be made on the fly, and traditional business models will get thrown out the window.
That will sorely test the ability of company’s CEO to think on their feet and to assess risk. Moreover, finance functions like accounts payable and auditing will be outsourced, as will the bulk of a company’s software hosting. The best businesses will be those that move the fastest, continually reinventing their own best practices and bring considerable expertise to bear on every aspect of their operations. Innovation was once a competitive advantage; now it is a requirement.
Companies have to work smarter than ever to develop new products and services. Companies have to create innovative programs to motivate employees in order to maintain their competitive edge. Innovative businesses are marked by less hierarchy, more risk-taking, and more investment in idea generation. For example, at google. com, employees spend part of each day on new idea development and their ideas are forwarded to management at the end of each week for execution. By midday, 15% of employees’ time is spent on generating new ideas.
Successful businesses of the 21st century will look very different than businesses in then 20th century. It’s an economic reality that companies can’t work alone in today’s speed-intensive and technology-intensive world. Successful businesses should operate with a small core of employees together with a large network of vendors, suppliers, outsourcing partners, etc. This virtual type of company using small, nimble suppliers will allow greater speed and better work while saving time and money thus keeping overhead costs to the minimum.
One industry already capitalizing on the benefits of virtual partnerships is the pharmaceutical industry, where many early-stage research and development projects are outsourced to smaller firms. The biggest challenge for any virtual employers of the 21st century is to determine how to create a company culture in the midst of all these interdependent relationships. A big challenge facing businesses in the 21st century is that the population rate is increasing at a fast rate.
Developing countries will have more people than jobs thus causing an immigration burst that will continue to grow causing a brain drain in many developing companies. The gap between skilled and unskilled will continue to grow. A business that fails to address this challenge will face problems of trust in their culture. The complexity of doing business in the world will increase with ongoing issues of financial instability, leadership credibility, and global/political tensions. Change is a constant companion, but most organizations aren’t equipped to handle change very well.
All employees must have common tools and processes to deal with change. The company, Shell Oil, is an example of a company that built the capability to deal with ambiguity with a process called scenario planning. It helps Shell Oil develop alternatives to prepare for the future. Recently, Shell took the process one step further by separating the unknowable from the inevitable. This is called TINA-There Is No Alternative-it focuses on the inevitable trends such as globalization and technology. TINA has resulted in annual cost reductions of $4 billion for Shell.