Andrew Curry writes: Businesses need to change in response to the changing business environment, or they will struggle. That’s the short version of our recently published Future Perspective report, The 21st Century Business, which I have co-written with Jules Peck of Jericho Chambers.
The argument goes as follows: the external environment in which businesses operate is changing significantly, in three particular ways:
- A raft of resource-related issues is becoming more challenging, from food and water pressures, to fossil-based energy, to early climate change impacts such as extreme weather events
- Ubiquitous personal digital technology and media is changing social and individual behaviour
- We are in the middle of a shift in social values, exemplified by the new interest in wellbeing, which has both personal and public dimensions. This is part of a deeper social transition, as Hardin Tibbs has argued (opens pdf).
When the landscape shifts, so businesses have to find new ways of working, and 21st Century Business identifies six significant shifts in the way that successful 21st companies will do business, to generate new value. These are, in summary:
- From disconnected to networked: The networked business understands that its different parts form a single system, and acts on that.
- From closed to open: The open business operates in a porous way, letting the outside world in and building mutual advantage.
- From fixed to fluid: The 21st century (fluid) business uses management and budget processes that respond to external change.
- From volume to value: Businesses increasingly tailor products and services to their users. wrapping products in a tailored network of services to do more with less.
- From risk to opportunity: Regulation and other external shifts will come to be seen as signs about the boundaries that society places on markets, so will become a platform for innovation.
- From consumers to citizens: Companies will succeed by delivering against needs that reflect their customers’ whole lives, as citizens as well as consumers.
Together these raise interesting questions about the way that businesses think about their customers and their markets, about their innovation processes, and about their workforce.
The underlying story is that businesses are operating in a far more open environment, and are therefore far more vulnerable to external change. In the 20th century, businesses – at least of any size – set out to manage their entivonment. Now they need to adapt to it, and have mechanisms to absorb change and then respond to it.
For me a couple of important points come out, which we write about as guiding principles.
The first is that culture is more important than strategy: in a more open environment, everyone needs to know what do do and why you are doing it.
And the second is that intrinsic, or internal, personal values are a better guide to action than extrinsic values driven by more materialist views of the world. This is true both of customers and staff. It leads to deeper, longer-lasting relationships and creates new platforms for growth.
The report is available on our website. The cover design, seen at the top of this post, is by The Futures Company’s Gus Newsam.