Planning for success in a changing world
The corporation is at a crossroads. The businesses that we have grown up with and the business models that underpin them face deep challenges. They are being reconstructed, from within and without, by pervasive technology. Their values, and the values associated with work and the workplace, are increasingly being questioned. Their model of resource use, of “use it and throw it out,” is increasingly running up against constraints of supply costs. New ways of designing and managing businesses, and new business models, are inevitable.
The list goes on. Corporate behavior towards society, including their customers and employees, is
increasingly under scrutiny. The financial crisis has sharpened the idea that unethical and unsustainable behavior is an external cost that should not be paid for by the public, and that if companies draw on public services, such as roads and education, they also should make a fair contribution.
In short, the assumptions that governed the mass-production businesses of the 20th century, and were codified by managers, researchers and academics in the ’50s and ’60s, have run out of gas. They are no longer fit for purpose.
Our leading businesses already understand this and are acting on it. Across the business world there are examples of companies that have started to absorb the lessons of the 21st century and have started to adapt. They are innovating their business models, their corporate systems, and their organizational hierarchies. The sense that change is in the air is amplified by the number of business initiatives that have been sparked recently. By way of illustration, one influential CEO, Paul Polman, at Unilever, is engaged with four such initiatives: the Inclusive Capitalism Taskforce, the Sustainable Economy Project, the B Team and the “We Mean Business” coalition.
The changes outlined in this Future Perspective represent a significant disruption to the way most businesses operate today. Some may still believe that, eventually, we will return to a pre-crisis world. This seems unlikely.
As we discussed in our Future Perspective Technology 2020, financial crises are typically associated with a deep transformation in infrastructure and technology. They mark the start of a long transition in how society thinks about itself. We’re still at an early stage in that journey, but businesses that do not adapt are unlikely to survive in the medium-to-long term. In other words, however great the costs of change, the costs of not changing will be higher.
The challenges run deep. In this Future Perspective, we first outline eight macro forces that are reshaping the 21st century corporation. We then examine the landscape of the business journey to sustainability and beyond. Next, we analyze the six pillars that will frame the 21st century organization, finishing with a discussion of how to start on this journey towards the future.
In summary, the whole story can be wrapped into three guiding principles:
- Organizational culture is more important than strategy
- Intrinsic values are becoming more important than extrinsic values, for both customers and employees
- Connection is the key to both driving down cost and driving up customer engagement
The business models that were developed in the 20th century emerged in a world of abundance, but the business models of the 21st century will have to contend with scarcity. If the business world of the 20th century was that of the limitless, open range, that of the 21st century is more like an ark—cramped, delicate and confined.