Despite the sluggish worldwide economy that we have experienced in 2016, economists still expect global growth forecasts to remain fairly static in 2017 with a potential increase later in the year. But it’s insanely difficult to predict the future, particularly one that is VUCA: Volatile, Uncertain, Complex and Ambiguous.
So what’s a business leader to do?
It’s pretty safe to say that change is only going to keep accelerating. Certainty is dead. Those who can embrace change and adapt will be the organisations that survive. It all boils down to creating an emergent strategy that shifts during changing conditions. Gone are the days when companies could review their strategic plan every three years. Now, boards and the C-suite need to be reviewing their strategy and its progress every month.
Of course, not all strategies are equal. If you look at the latest trends in business, there are certain areas companies need to consider for their 2017 strategic plan. These are:
1.Shift to Digital – Digital disruption has been around for a while, but it is still changing business and operational models. Organisations who choose to ignore moving to a digital business model risk becoming obsolete. And it’s not all about how to make your company operate like Uber or AirBnB. Instead, it’s also about how to more effectively use digital technology, in order to embrace opportunities.
Thanks to the plummeting cost of computer power big data is easily available to companies to make better business decisions based on actual numbers rather than guesses. This includes accurately capturing all the data that streams into businesses and applying analytics to get more granular customer insights.
There are a couple of ways this can be done. The first is for organisations to consider employing a chief disruption officer to assess all areas of the business. Companies that are doing this are finding that they are able to successfully compete in low-cost ways and find new revenue.
A second method is to encourage the CFO to lead this project being the most trusted in the C-suite they also have the skills to adequately manage risks and oversee costs.
According to a study by EY, digital transformation is best done with CEO and CFO collaboration. It’s starting to become increasingly important with 50% of CFOs surveyed considering the shift to digital to be of high or very high priority for their organisations in the next three years.
2. Improving Leadership Capabilities – Given slow business growth, the trend for organisations to avoid hiring will continue. Organisations will do more with the people that they have. This means improving training, but leadership training really is the area of the greatest shortfall in Australia. Companies who will be able to successfully navigate these shifts need to be more than just crystal-ball readers producing the best value-creation strategy. They will need the right leaders who can execute the strategy through influencing others to head in a new direction.
The Study of Australian Leadership (SAL), by the Centre for Workplace Leadership at the University of Melbourne, found more than 40% of organisations did not meet their performance targets for return on investment and profitability. The research found a clear link between leadership capability and high performance. Overall, their main finding was that Australian organisations do not have the leadership or management skills needed to meet challenges of the 21st Century because most companies fail to get the basics of leadership and management right. The main culprit is a failure to invest in frontline and middle management leadership training, where it is needed most.
Furthermore, a recent LinkedIn study found that 69% of human resources decision-makers in Australia and New Zealand believe it is challenging to ﬁll leadership positions. The reason is because candidates lack soft skills and leadership competencies.
Today, complex business problems depend on a lot of engaged minds working together to devise a solution. It’s not enough for the management team to devise solutions. Tough decisions require as many people as possible, particularly those on the frontline who are better equipped to understand what customers want. Leadership training that centres on improving feedback mechanisms within the company, so that everyone feels safe to discuss potential opportunities and flag strategy risks is the key. Soft skills that focus on leaders improving on how the communicate change, seek feedback and create a high trust environment will nurture the right diverse workplace that harnesses collective action.
3. Improving partnership capabilities – Successful companies realise that partnering with other companies is the best way to address capability gaps. If you watched the video of the iPhone 7 launch, Apple rolled out partnerships with both Nike and Nintendo. In Australia, Qantas has partnered with NIB and AirBnB.
According to the 2016 PwC Annual CEO Survey, 53% of Australian CEOs are looking at joint ventures and strategic alliances. This trend is set to continue and become an important source of competitive advantage in 2017.
To take action on this trend, organisations need to ensure their management team has the skills to collaborate and align collective interests. Organisations who struggle to remove silos, turf wars and self-interest among senior leaders will also struggle to effectively build external partnerships. Many organisations who jump into a partnership, without ensuring their staff have the right capabilities to negotiate a win-win deal end up with expensive court cases. Think Tiffany & Co and Swatch (Swatch was paid $448 million in damages), as well as Lowes and Masters who are currently in arbitration.
Partnership deals require high-level capabilities such as the ability to align venture both business and operational strategies, the right cultural fit, satisfying the needs of both parties – not the biggest company, delivering on capabilities and picking the right business model. Again, improving leadership capabilities will ensure a better fit and execution of joint partnerships.
4. Improving cyber security – This is the one that can bring an organisation down to its knees in a short space of time. It’s also considered the fiduciary duty of board members to protect the organisation from cyber crime. Stiff penalties exist for ignoring the risks. These fines don’t even take into account the damage that can be so violently inflicted on an unaware organisation.
Each year cyber crime increases in frequency and sophistication, so technological defences alone are no longer sufficient. To take action, at the next board meeting, review your cyber security risks and bring in an expert to perform an audit with steps on what needs to be done.
In the busy day to day life of an organisation, these four risks often fly under the radar because they’re not urgent. But taking time to work on the business and not in it and assessing the business landscape is an important step towards ensuring your organisation has a successful year in 2017. It’s time to challenge the status quo and remove the roadblocks that are stopping your organisation from achieving a successful 2017.