Global mega trends

Economics, Society and Business

In a world undergoing change where there are few certainties, it is useful to anticipate and plan for trends. These trends will affect us as individuals and the types of organisations we work with.

As a regular facilitator of strategy planning workshops I am always interested in the analysis of future trends. Today I share with you the views of Professor Joe Nellis of the Cranfield management school.

The trends themselves are unsurprising but the accelerated pace of change is what impresses – and frightens. Our question is what are the implications of these trends?

Professor Nellis divides the trends into three areas; Economics, Society & Environment and Business.

Economics – 3 trends

The massive realignment of economic activity from the West to the East is unprecedented. Today China accounts for less then 10% of world GDP, by 2050 it will be probably be the world’s biggest economy and have a GDP share of 25%. India is also pressing strongly behind China, and of course the US will remain a dominant force.

This economic growth in emerging economies will generate a demand for improvements in living standards. Citizens from emerging market countries look for improved public services; more schools, hospitals, infrastructure and better policing. This demand will result in an anticipated huge growth of the public sector in these countries.

Finally, the third economic trend is the unprecedented rise in the number of consumers in emerging and developing economies. Consumers with similar spending power to that traditionally associated with the West. It is predicted that there will be 1 billion of these consumers with needs to satisfy. Nellis says “such a demand to satisfy has never happened before in such a short time scale”.

Society & the environment – 4 trends

For the first time in the history of the world, people all over the world will be able to communicate with each other. Increasingly people in developing economies are gaining access to technology. In this connected world there will be a massive growth in interactivity. More companies will interact with other companies, and interact with individual consumers. This deepening globalism will, says Nellis “have profound implications for the world of business and society”.

Taking the number of university graduates as a measure of the future talent pool; the developed world produces about 16 million graduates per year. The rest of the world is graduating 33 million students annually. There will be an “exponential growth in the talent pool coming from countries of the emerging markets and the developing world.”

The shortage of natural resources is a trend that is widely accepted. The search for natural resources is intensifying. China is securing natural resources all over Africa to feed its economic growth, in Cornwall tungsten mines are about to open and closer to home there are plans for oil exploration offshore from Dalkey in Dublin.

The last societal trend he mentions is the increase in the lack of trust in big business (and in politicians). Corporate governance is increasingly important for larger companies, and how it can be used “to their advantage and to the benefit of society”. Pay and remuneration must be tied in to performance, and directors must be accountable to shareholders and realise the consequence of their poor decision making. (What measures have been made to recover the 1990s bonuses from Irish bankers? And why are failed Irish politicians being paid large pensions before they reach the pension age of 67?) 

Building trust is about actions, delivering promises and not the empty words from corporate PR and “public affairs” executives.

Business – 2 mega trends

There are “massive issues” to be faced in industry and in business.

The first is the availability of information through search engines on the internet and sites like Wikipedia. How will managers deal with information overload? Can products and services be mass customised for individuals and not only for market segments? The use of information is a huge opportunity for businesses, and “dealing with the overload a significant challenge”.

A combination of all of the above, of the increasingly connected and trading global village is that industry structures will change. New global networks will emerge as well as bigger companies (many of them state owned in emerging markets). Nellis anticipates “different business models and developments concerning the way in which companies interact with each other”.

Big Change is here

How can managers “manage” in this world of increasing complexity? Nellis suggests there is no choice, “if you don’t like complexity, don’t go into management!” The right talent must be recruited to run companies in a much more complex environment.

Gone are the 50 year economic cycles identified by the Russian economist Kondratiev. There has been a major seismic shift, the cycle of economic change is now much shorter, 10 to 15 years. Challengingly, a manager’s career will endure several seismic shifts. Previously managers would have lived through for example one or two economic cycles of ‘growth to recession’. Organisational change will need to be delivered quicker, and better.

Short term focus will no longer suffice, “a successful manager must stay focused on the horizon”. The pace of change is accelerating as has never happened before. “Address these long-term drivers of change now”, Nellis asserts, “or you may be heading for extinction”.

The question facing leaders is how can an organisation take advantage of these global movements?

Joe Nellis, Professor of International Management Economics, Cranfield School of Management, www.som.cranfield.ac.uk/som/

Billy Linehan of Celtar has much experience in strategic planning with clients, facilitating workshops in planning for change. Based from Dublin, Billy has a long term interest in future thinking and is available to work with you in anticipating future trends and how they will affect your business or organisation. Contact Billy at billy.linehan@celtar.ie to benefit from the input of an external adviser into your strategic thinking and business planning.  

Aged 30? You’ll be working until 2050!

 This topic from Incite 75 has provoked much comment, and added several new subscriptions. There is an intense interest in how we can manage our own destiny in these uncertain times. Look out for further postings on “future thinking”.

In her book “The Shift: the future of work is already here” Lynda Gratton discusses how work will change in the future. Based on extensive research she describes how to craft a career that can best stand the test of time.

The perspective that is described below will affect how you think about your career, and gives food for thought to directors and senior managers on their resource planning and how to support individual career expectations.

Looking at present trends she explains that if you are now aged 30, you can expect to work for the next 40 years – that means in 2050 you will be a member of the workforce. If you are 50, you can expect to be actively employed for another 20 years – that’s 2030. If you have young children, they could be working until 2070.

Professor Gratton identifies 5 forces that will shape work and careers;

1. the globalisation of talent,
2. the development of connective technologies;
3. the changes in demography and longevity;
4. broad societal forces that will see trust in institutions further decrease and families become ever more re-arranged;
5. and the effect of carbon use [and presumably the rising cost of energy, and the challenge of sustainability].

From her blog Lynda offers 10 tips about skills, networks and choices to which I have added some additional comments, see below.

1. Keep informed and up to date on the forces that are shaping work and careers where you wish to be employed.
2. Learn to be flexible & virtual – If you are a young ‘digital native’ you are already connected to this – but if you are over 30 the chances are you are already behind on your understanding. Work will become more global and that means that increasingly you will be working with people in a virtual way – it is crucial that you learn to embrace these developments and don’t let yourself become obsolete through lack of technical knowhow.

3. Search for the valuable skills – think hard about the skill areas that are likely to be important in the future – for example sustainability, health and wellness, support for older people, design and social media are all likely to be areas where work will be created over the next decade. Remember that personal service jobs that involve working closely with people (chef, hairdresser, physiotherapist, nurse & business mentor) are unlikely to move to another country.

4. Become a Master – don’t be fooled into spread your talents too thinly. Being a ‘jack of all trades’ will mean you are competing with millions of others around the world, or tens of thousands in your own country, who are similar. Separate yourself from the crowd by really learning to master a skill or talent that you can develop with real depth.

5. Be prepared to strike out on your own – there will always be work with big companies. We have entered the age of the ‘micro-entrepreneur’ when ever decreasing costs of technology will significantly reduce the barriers to getting off the ground, and when talented people across the world will be connected and keen to work with each other.

6. Find your own crew – to create valuable skills and knowledge you will need to quickly reach out to others who can help and advise you. This small  ’crew’ of like-minded and skilled people is a network that will be central to your really building speed and agility in your career.

7. Build the Big Ideas network – the future is about innovation, and sometime your best, most innovative ideas will come as you talk and work with people who are completely different from you – perhaps they have a different mindset, or come from a different country – or are younger. It is this wide network, the ‘big ideas crowd’ that will be a crucial source of inspiration.

8. Go beyond the family - your career success will depend in part on your emotional well being and resilience. In a world of ever shifting relationships, it’s important that you invest in developing deep restorative relationships with a couple of people – this is your ‘regenerative community’ and they are crucial to your well being and happiness. [This is part of Lynda Gratton’s prediction that the family as a unit is fragmenting, and in future people will create their own “families” though not linked by blood].

9. The new hard choices – your working life will be shaped by the shifting patterns of longevity (you are likely to live considerably longer than your parents) and demography (in many regions there will be a much higher proportion of people over 50). So you need a strategy for the long term.

You have three new choices:  1. Build a career that enables you to work longer (at least into your late 60′s or early 70’s), 2. Be prepared (like the Chinese who save around 40% of their income) to save a significant proportion of your income throughout your working life, 3. Consider ways to reduce your consumption and live more simply. It does not matter which hard choice you make – but you are going to have to make at least one of them. [Think also of how your parents are living much longer then their parents, and how will this affect your chosen career].

10. Become a producer rather than a simple consumer – the old deal at work Lynda describes as:  ’I work, to earn money, to buy stuff that makes me happy’ is rapidly becoming obsolete. Engaging in meaningful work where you can rapidly learn to create value will become a priority.

For more on Lynda Gratton, her publications and the Future of Work Consortium

see www.lyndagratton.com

Gratton is Professor of Management Practice at London Business School

To have a facilitated discussion on this or related topics, contact Celtar billy.linehan@celtar.ie

How to Get Started, Implement and Deliver Results
in a very difficult environment.

I see that change management consultants Eddie Molloy, Ian Kierans and the Advanced Organisation team are holding a new training programme for senior managers in the coming months.

 Eddie has received national attention on TV, RTE radio and the Irish Times for sharing his articulate perspectives on the need for transformation in the public sector. He and his expert team have also worked extensively in the private and NGO sectors.

Having a attended a similar programme four years ago, I can testify to its value in terms of understanding the dynamics of change – and it’s effectiveness in ensuring the delivery of results.

To quote Eddie on today’s environment

“In the 30 years I have been assisting companies with managing change, I have never seen so many organisations across all sectors facing such difficult situations. To survive most of them need to change – radically and quickly.

Change rhetoric is commonplace today. However to make change a reality remains a complex job that requires a mix of capabilities from ‘hard’ ones (e.g. rigorous programme management, restructuring, process reengineering) to ‘soft’ (culture change and stakeholder engagement).

If your organisation is faced with managing significant change and you are serious about getting real results then this programme would be invaluable to you and senior colleagues.”

For full details including modules, possible dates, prices and method of booking email ed@advancedorganisation.com

Also see

www.advancedorganisation.com

Useful information from Celtar, advisers for business

Contact 086 608 6991

Today we present an interview with the Harvard professor John Kotter on  good and bad urgency.

John Kotter’s  recent book A Sense of Urgency is a popular business book. Managers identify with his message that complacency can most effectively be overcome when organisations develop a mindset that the time for action is now.

 Here is how Kotter explains the difference in an interview with Inc.com.

Does your company have the right sense of urgency? Does your calendar pass Kotter’s white space test?

John Kotter got an enviable — if unintentional — endorsement when then-candidate Barack Obama began inserting the phrase a sense of urgency into his comments about the economy. A Sense of Urgency (Harvard Business Press, 2008) is the title of Kotter’s latest book on fostering change in organizations — a subject the Harvard Business School professor has owned since publishing the seminal Leading Change, in 1996.

Kotter believes there are two kinds of urgency — and, like cholesterol, one is good and one is bad. The good kind is characterized by constant scrutiny of external promise and peril. It involves relentless focus on doing only those things that move the business forward in the marketplace and on doing them right now, if not sooner. The bad kind — to which many companies have recently succumbed — is panic driven and characterized by breathless activity that winds up producing nothing demonstrably new.

Kotter advises leaders to stamp out the bad urgency, which demoralizes and drains people, and use the — dare we say it? — opportunity of the economic crisis to remake their organizations with a lean and hungry look. And he encourages them to sustain that newfound urgency even when flush times return.

Samuel Johnson said nothing focuses the mind like a hanging. Has that happened with the recession? Has it focused the minds of company leaders and created the sense of urgency you advocate?

I wish that it had. Many companies probably think they’re responding with urgency, and there are certainly a lot of people running around trying to come up with solutions. But most of that activity is going to be ineffectual, because it is driven by a fear of losing. It’s not that gut-level determination to win and to make absolutely sure that they do something every single day to keep pushing that goal forward. That’s true urgency.

How can you distinguish good urgency from bad urgency?

There are lots of signs of false urgency. Frenetic activity. Everyone is exhausted, working 14-hour days. One red flag is how difficult it is to schedule a meeting. With true urgency, people leave lots of white space on their calendars, because they recognize that the important stuff — the stuff they need to deal with immediately — is going to happen. If you’re overbooked, you can’t manage pressing problems or even recognize they’re pressing until too late.

People think that in urgent situations, they’re expected to take on more and more. They’re worried about keeping their jobs, so they try to demonstrate their value by being incredibly busy. But the leader should be telling them to do just the opposite. He should say, “I want everyone to look at your calendars. What’s on there that doesn’t clearly move us forward? Get rid of it!”

True urgency is the most important precursor of real change. Seventy percent of change efforts fail or never launch at all, and one reason is that company leaders don’t create a sense of urgency around what they’re doing. They go straight to solving the problem. So, with true urgency, you would expect to see change. Something new should be happening. How many companies are going to come out of this doing things in a new way? Not just diminished but actually changed?

One of the best — or worst — examples of this is Washington, D.C. Are the two parties interacting with each other in a new way to reflect the new situation in the economy? Are the special-interest groups behaving in a new way? Is the administration staffing itself in a fundamentally new way? No. But they’re all extremely busy.

If the economy and job loss don’t jump-start change there, what will?

It’s hard to imagine that these days anyone could feel complacent, but the fact is, Washington is crammed with complacency. Because the country has done pretty well over the last 250 or 300 years. Congress is full of people who get reelected and reelected. How can you have urgency when there are all of those safe seats? Obama started using the phrase a sense of urgency during his campaign. That’s a good sign.

But then he waited two months to get change started, because “there’s only one President at a time.”

Funny you should say that. I wrote an op-ed piece that I never sent to anybody, in which I talked about what I would do if I had been elected President. On November 5, the day after the election, I would have made a 15-minute speech on TV. I would have said that our economic problems are significant, and they’re going to stop me from fulfilling all my promises. And I would have made it very clear that, though I’m not President now, I pledge to you that starting tomorrow morning — on November 6th, 7th, 8th, 9th, 10th — I am going to make damn sure that the people around me and I are making headway on this. And I want you to help me, because I think that collectively, we can turn something horrible into something that might even energize us in some way.

There’s something similar going on right now at an 80-year-old manufacturing company I studied. It’s in the middle of a corporate succession. The new guy is taking over in October. And he’s trying very hard not to be disrespectful and start pretending he’s running the place before the CEO is gone. That’s a mistake. He should get in front of the crowd and make his urgency speech. With a real sense of urgency, you’re not held back by protocols or concern about hurting someone’s feelings.

As you say, it’s hard to imagine anyone feeling complacent these days. But I wonder whether companies are most vulnerable to complacency after a big success.

If you’ve been successful long enough, complacency doesn’t disappear easily. And it’s fine to celebrate success: You have a sales appreciation meeting and give out a bunch of awards to your employees. They deserve it. They helped you to grow 30 percent this year. But that’s history. So you ask them, “What do you have on your calendar for tomorrow that’s going to help us grow 30 percent next year?”

In my recent book, I wrote about a manager I met at a company in India — it’s an outsourcing business, and he’s in charge of three or four offices. This man is a walking urgency machine. And what he always says is that historical success guarantees nothing. Nothing. Nothing. Nothing. He’s not a negative guy. But he’s relentlessly realistic.
You say something pretty provocative in the book: that sometimes, in the face of complacency, it’s actually OK to manufacture a crisis.

Obviously, you need to be careful with this. If people think the boss is manipulating them to get them to work harder, it backfires. It works best if the crisis is real but no one has been paying attention. Decay in a company or an industry happens gradually, microscopically, one day at a time. Sometimes, you have to make the point: This thing is weaker than you think.

I wrote a while ago about the CEO of a health care firm who took his company through a turnaround. But then they got so far ahead, everyone settled back into a deep complacency. So he changed the context. He started asking, “Whom should we be comparing ourselves to? Yes, we’re beating everybody in the marketplace. But what if the relevant question was, ‘Are we beating them in the financial marketplace?’? Investors don’t make choices just among companies in the same industry. Companies in different sectors are competing with us for funding. And when you run those numbers, we don’t look as good.” That woke people up.

It’s a great question: “Whom should we be comparing ourselves to?” Detroit didn’t ask it soon enough. The broadcast networks didn’t ask it soon enough. Don’t just look for new customers but also for new competitors. Broaden your definition of competition. You go from “Here we are, the dominant player” to “Here we are, this dinky business in a much larger pool.”

One exercise I’ve seen leaders do is come up with a company that doesn’t exist. Then they’ll bring people together and say, “You are the management of that company. Your job is to kill our company.” They do that in the morning. Then, in the afternoon, when their thinking is a little different, they talk about how to kill the new competitor.

Are open-book companies better at creating and sustaining urgency, because everyone is always aware of exactly where the business stands?

Not necessarily. A lot of people create heavy-duty measurement systems to track the progress of their companies, but that’s not how leaders with the greatest sense of urgency do it. They pay attention to their internal numbers, but they’re much more interested in what’s going on outside. They want to have as many metrics about their competitors as they do about themselves.

Metrics are very useful, but they have to change like everything else. If you always measure the same things, you may always get the same answers. We think numbers keep us alert. But maybe they’re putting us to sleep.

How much attention should you direct to the outside world versus internal matters?

There should be no meetings that are only about internal matters, without any connection to the outside world. In some way, the outside world always provides the “why” we are doing something. That Indian manager I mentioned is great at this. His meetings are never about internal chatter. They’re always about what technology is being developed in the United States or which competitors might enter the company’s market. It doesn’t have to be strictly competitive. For example, if you’re putting in a new software system, you should be saying, “What other companies do we know that have done this? What problems did they solve, and how did they solve them? Wouldn’t that be useful information? Let’s get it.”

How do you get people to think like that?

You model it. You talk about the big dangers and the big opportunities. You talk in specifics: “We’re a company that helps set up trade fairs. Alibaba, which does Internet trade fairs, grew 90 percent last year.” You’re not trying to get people to panic. You’re trying to get them to think. And you always say what you are going to do first. Not just what you are going to do someday: what you are going to do tomorrow. And then you ask everyone else what they are going to do tomorrow. And if it doesn’t advance the ball, they shouldn’t be doing it.

One of my executive students gave me a two-page letter that his CEO had sent out in November. Part One said, “We’re in a mess. Denial doesn’t help. Here are some statistics to show it.” Part Two said, “It is useful to look at history. Thirty years ago, this company was in a worse mess. Look at us now. We’re 10 times bigger. The U.S. economy had deeper recessions every 20 years in the 19th century. And here we are — the most powerful nation on earth.” Part Three said, “We’ve got to link arms and address this thing, and it’s going to start with me. I’m going to try my damnedest to figure out 1. how this doesn’t hurt us and 2. how we can find opportunities in this. Because there are opportunities.” The last part was, “Here’s what I’m going to do, and here’s what I need your help with.” The final note was hopeful but not naive. That’s great urgent leadership.

You say that urgent leadership is emotional. After a period like this, when organizational life is more than usually fraught, should you give people a break?

No. True urgent leadership doesn’t drain people. It does the opposite. It energizes them. It makes them feel excited. And the idea isn’t so much that the leader is always showing emotion as that he’s trying to produce the right emotions in the people he leads. But again, he has to model it. You can get people to respond rationally to a problem, but if you haven’t stirred their hearts and minds, once the immediate crisis has passed, you lose them. The sense of urgency dissipates.

So if the Klingons were attacking, you’d want Kirk running things, not Spock?

I don’t care what the situation is. I always want Kirk running things.

 Inc.com 2009

Dealing with economic turmoil

The idea behind this article is that leaders make change happen – and to do so requires a multifaceted approach identifying and addressing the obstacles to change that are ingrained in every organisation. The Centre for Leadership Development has highlighted 5 key areas which are critical for senior executives to adopt.

Billy Linehan

Your organization has likely been charting a new course to get through today’s economic turmoil. But is your new direction getting you there?

History shows that change initiatives – realignment, restructuring, re-engineering and the rest – succeed only one time out of every four. 

Why so much failure? Because senior leaders blame their organizational problems on faulty structures, systems and processes, and those are the things they try to fix. They are partly right, but there is usually, a more powerful, factor at work too: the company’s culture. [Another factor may be the leaders themselves as the major obstacles to change]

 Change in operations, especially dramatic change, doesn’t work without deeper and more subtle change in corporate culture and in how leaders think and act. The systems, practices and beliefs that drove yesterday’s success – in other words, the organization’s culture – are always deeply ingrained. And they’re usually not what you need to move forward in a radically altered economic and competitive world. Change leadership, on top of skilled management, is what truly transforms organizational culture and drives bottom-line results.

 To successfully change a business in the face of the huge complexities of today, senior leaders need to have wider perspectives. Not all executives and leadership teams are ready for that, and the intense operational pressures of the moment can make it even more difficult. But some leaders do make bold moves even in the most trying circumstances.

The US located Centre for Creative Leadership has identified five requirements for getting a senior team ready to embrace change leadership and drive better performance.

1. The executive team must be engaged – really engaged.

 How often have you seen executives announce a new initiative, rally everyone to get on board with the change – and then fail to follow through themselves? When executives don’t genuinely change, no one will.

Why should others take on the risk when senior leaders won’t?

 It’s better not to go through the motions at all if your team has little commitment to making it all happen. Dismal change efforts only breed cynicism, and they make any future attempts less likely to succeed.

 2. The team must know and value leadership development.

 To change a culture, you must believe in the value of developing both individual leader capacity and organizational leadership capability. Key people in the organization have to strongly support learning, and the organization needs to have experience with and show appreciation for leadership development.

 One of our clients realized this early in his tenure as chief executive officer of a logistics company. He knew the organizational culture had to change before the company could become more competitive and responsive. But the gap between his vision and the experience of his long-time employees was too great. So he focused first on individual learning and creating a shared, new view of leadership development.

Since then, his managers have been getting more comfortable with learning, with giving and receiving feedback and with questioning assumptions–which are all core elements of change leadership.

 3. Senior leaders must understand that leadership at the top is a missing essential.

  “We have gone as far as we can with change management within operations,” the managing partner of a firm of solicitors told me. “Now we believe the real change must be in our leadership and culture, but we just don’t know how to do it.”

 This leader had a problem. He clearly needed to improve operations, but his change management wasn’t doing it thoroughly enough or fast enough.

He knew instinctively that he had to improve the human element, building talent, changing behaviours and altering the culture – key elements of change leadership.

 4. The senior team must be willing to take on new, different work.

 Changing an organization’s culture can never be done by formula or guarantee specific results. The senior team has to develop its ability to tolerate uncertainty and ambiguity, in terms of both business variables and human variables. A critical element of this is the willingness to dedicate time to wholly new challenges.

 At a manufacturing company we’ve worked with, the executives recognized that developing a culture that could welcome change would require considerable learning. But taking time out for it from focusing on manufacturing seemed bizarre and foolish to many. “Stop to do what? To talk? That’s nuts!” a few managers said. Changing that attitude was a very big undertaking. But the senior team was determined to make it happen, and the process took root and led to positive and permanent changes in business performance.

 5. The senior team must recognize the need to work across boundaries.

 Change leadership requires frequent crossing of functions, alliances, suppliers, partners and even whole chains of activity. It is about flexibility, collaboration and having less bureaucratic relationships – and it is at odds with hierarchical command and control. Such boundary-spanning or boundary-busting work is becoming more and more common, but it remains a challenge for many managers and organizations.

 You can transform your organization’s culture. Businesses can and do evolve to face new challenges. Individuals, teams and entire organizations can change their belief systems and attitudes and learn new behaviours. Executives can develop the ability to solve bigger problems. The first step is to understand where you are as an individual and as part of a leadership team. Are you ready?

  Based on an article by John B. McGuire of the Centre for Creative Leadership for www.Forbes.com