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.
Change and growth represent two of the most disruptive dynamics businesses can expect to face during their economic lifetime. As the business landscape of the early 21st century unfolds, four trends are clearly discernible that suggest this disruption is set to increase:
- Consolidation across industry segments will continue at a fast pace
- Pressure for public accountability will grow
- New business models will emerge that challenge the traditional ways in which businesses organize themselves
- The relationship between people and performance will become as important as the links between products, services and markets.
3. Managing business change
Managing change and growth does not happen in isolation. Smart leaders are meeting these evolving trends with relevant changes in workforce strategy, organizational design, and corporate culture. The following are strategies that businesses should consider when facing new challenges in the 21st century.
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Strategies business should consider when facing new challenges in the 21st century
- Businesses need to be more innovative in order to succeed
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.
- Businesses have to improve their knowledge
Education is more important than ever. Companies must develop more capability,
processes, and programs to increase knowledge and education. The most important
function of the human resource division in the 20th century was delivery, executive compensation, or leadership development. In the 21st century; training and development will be the most important function of the human resource department. Employees’ capacity to constantly learn is linked to a company’s success. Employees are motivated and engaged when a company operates with values and a noble purpose.
- Decline in Employment
The 20th century was the first time people started working for other people. The
21st century will witness a reversal of that trend. It’s estimated that 80% of all job
functions will be obsolete in 5 years. Telecommuting employees will grow from 30 million today to 100 million in ten years. The challenge for employers is to build a “virtual” culture and effectively manage these remote employees.
3.1.4 Employee loyalty will begin to erode
The workforce will become more contingent, with the ability and desire to switch employers and vendor relationships very quickly. Tenure is decreasing among employees. Disloyalty will be the norm; loyalty will be special. Most employees approach their careers as “Me, Inc.” Employers must learn how to create relationships and build mutual commitment with contingency staff. The only sustainable advantage in the 21st century will be relationships among company, employees, and customers.
It’s been proven that organizations that value human capital have higher margins
than those who do not. Companies must identify their values and purpose and
communicate it constantly with employees.
3.1.5 Businesses will become a network of partnerships.
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.
3.1.6 Growing disparity is coupled with growing tensions.
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.
3.1.7 Uncertainty will continue to increase.
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.
3.1.8 Technology
Technology can play a significant and positive role in providing businesses with the ability to respond in an agile manner to the velocity of change and the pressures it brings.
The speed of technology is creating a true global economy. The future of businesses will be driven by global knowledge, but many in the world do not have access to the Internet, further dividing nations into “haves” and “have-nots.” Technology is becoming more advanced and businesses who are not keeping abreast of new technological trends will be left behind. The competitive landscape has intensified, making it critical for companies to get as close as possible to customers. This is a huge challenge facing businesses if they wish to connect to customers who are not technologically minded. Enhancing customer relationships is the name of the game: Customers are more informed about products and services than ever, and they expect customized solutions and instant response.
3.1.9 Leadership
The 21st century requires leadership that can manage ongoing change a marked difference from leaders of the past. The key ingredients for successful leadership will be the ability to use different management styles, know when to control and trust, and choose appropriate action for each situation. Leaders will be judged not by how many followers they have, but by how many leaders they create. For virtually every market leader today, the answer always comes back to a people culture based on trusting relationships. Talent, knowledge, and creativity—“human capital”—is the critical factor in creating a competitive difference. Leading companies will put a premium on managers who can develop qualities of honesty, trust, and values—a shift from managerial requirements of the past.
4. Conclusion
The possibilities are exciting and scary. Organizations have heard the mandate: innovate, change, grow or die. Organizations that are up to the challenge will survive and thrive. Those that can’t or won’t are in for difficult times.
In order for a business to succeed in the 21st century, the business must be willing to follow these simple businesses strategies:
• Inspiring innovation and speed
• Sharing knowledge and information
• Providing better, continuous learning and education
• Managing a remote and diverse workforce
• Exploring flexible staffing models
• Developing a strong brand and identity
• Building loyalty among employees and customers
• Building a flexible, nimble organization
For the foreseeable future the key for overcoming new challenges is to stay ahead of the game. In other words, in the 21st century, the meek shall not inherit the earth. Welcome to your future.
5. Bibliography
- Managing Change and growth – White paper by Agresso
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www.Whitepapers.com – Business changes in the 21st century
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- Changes in the business environment in the 21st century