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.  

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

Digital & social media workshop presented by Conor Lynch of Socialmedia.ie & sponsored by Celtar business consultants

This seminar is something I wished to organise for a while, so I am very glad to present the opportunity to clients and other businesses.

Recognising the potential for clients in exploiting digital and social media I have partnered with social media expert Conor Lynch of SocialMedia.ie in this special seminar.

Many business owners & managers I work with don’t want to be left behind  and wish to avail of digital marketing opportunities and the latest ways of communicating with customers.

Benefits & features of seminar

1. Learn how to use social media to reduce marketing costs by generating more qualified leads
2. Hands-on training  – bring your laptop and begin co-creating a digital and social media strategy for your business
3. Training delivered using case studies and examples from participants
4. Training materials and handouts including free eBook: Introduction to Social Media
5. €95 cost – deep discount to Celtar clients – workshop normally priced at €145

When: Wednesday 13^th of July

Time:  9.30am to 2pm, includes light lunch

Where: 133 Capel Street , former Riverdance Studios

For more information about the seminar and Conor Lynch,

And to book & pay please go to

www.socialmedia.ie/services/training/celtar-social-media/

Book early as seats are limited!

 How maverick companies have passed up the growth treadmill – and focused on greatness instead, full list below

Small Giants by Bo Burlingham poses big challenges to those who assume that by definition growth is a good thing.

Accountants, bankers, commentators and business schools all tell us that thriving companies have to grow their profits and revenues year-on-year.

The only way is up they say.

Burlingham looks at businesses that choose ‘the road less travelled’… they reject the pressures of endless growth and instead they focus on being the best at what they do, creating a great workplace, legendary customer service, and a sense of community (both locally and in the workplace).

 In the book “Small Giants”, journalist Bo Burlingham takes us deep inside fourteen remarkable privately held companies, in widely varying industries across the USA, that have chosen to march to their own drummer. He searches for the magic ingredients that give these companies their unique “mojo” and the lessons we can learn from them.

 Attributes of these ‘businesses with mojo’ are:

 1. The founders/leaders recognised the full range of choices they had about the type of company they could create. They hadn’t accepted the standard menu of options or business model as a given.
 

2. They had allowed themselves to question the usual definitions of success in business, resisted pressures to follow conventional paths and to imagine possibilities other than the ones all of us are familiar with.
 

3. The leaders had overcome the enormous pressures on successful companies to take the paths they had not chosen and did not necessarily want to follow. They remained in control rather than accommodating themselves to a business shaped by outside forces.
 

4. Each company had an extraordinarily intimate relationship with the local city, town, or county in which it did business – a relationship that went well beyond the usual concept of `giving back.’” 
 

5. All companies cultivated exceptionally intimate relationships with customers and suppliers, based on personal contact, one-on-one interaction, and mutual commitment to delivering on promises.”

 6. Because they were privately owned, they had the freedom to develop their own management systems and practices. In fact the companies have developed for themselves a wide variety of corporate structures and modes of governance.

 
7. The companies also had what struck Bo as “unusually intimate workplaces.”

8. The leaders had unbridled, limitless passion for their business and about their service or product. Bo comments “I noticed the passion that the leaders brought to what the company did. They loved the subject matter, whether it is music, safety lighting, food, special effects, constant torque hinges, beer, records storage, construction, dining, or fashion.”

 
The 14 companies mentioned in the book Small Giants are

Anchor Brewing, in San Francisco: the original American microbrewery, see www.anchorbrewing.com

CitiStorage Inc., in Brooklyn: the premier independent records-storage business in the United States, see www.citistorage.com

Clif Bar & Co., in Berkeley: a leading maker of natural and organic energy bars and other nutrition foods, see www.clifbar.com

ECCO, in Boise: the leading manufacturer of backup alarms and amber warning lights for commercial vehicles see www.eccogroup.com

Hammerhead Productions, in Studio City, California: a supplier of computer-generated special effects to the motion picture industry, see www.hammerhead.com

Reell Precision Manufacturing designs custom hinges, wrap spring clutches, precision springs and wire forms, see  www.reell.com

Righteous Babe Records, in Buffalo: the celebrated record company founded by singer-songwriter Ani DiFranco, see www.righteousbabe.com

Union Square Hospitality Group, in New York City: the company of restaurateur Danny Meyer, see www.unionsquarehospitalitygroup.com

Zingerman’s Community of Businesses, in Ann Arbor: including the famous Zingerman’s Deli, see www.zingermanscommunity.com

OC Tanner Co. company with 1,600 hundred employees and annual sales of $300 million, see www.octanner.com

 
Rhythm & Hues Studios character animation and visual effects studio, see www.rhythm.com

 
Selima Inc a two-person fashion design and dressmaking firm

 
The Goltz Group parent company of celebrated Chicago retail stores Jayson Home & Garden, Chicago Art Source Gallery and Artists Frame Service, see  www.goltzgroup.com

 
WL Butler Construction Inc full-service general building contractor, see  www.wlbutler.com

Size and growth rates aside, these small giants share some very interesting characteristics. They are all utterly determined to be the best at what they do.

Closer to home in Ireland there are examples of small giants, many Celtar clients aspire to becoming “small giants”, and several are well on the path.

For more on the author and book see www.smallgiantsbook.com , Bo Burlingham is an editor at www.Inc.com

For more on us see  www.Celtar.ie

 Commoditisation of legal services

“It is worthwhile to reflect on what is happening in other industry sectors, and to review opportunities in your own environment,” says management consultant Billy Linehan . “The legal profession in Ireland has been battered by the recession, even the best of firms have suffered declines in turnover and profits. Firms must plan for a changing world with new business models” advises Billy who is a management adviser to partners in several professional services practices.

A combination of technology and a change in the law are bringing a radical change to the legal sector in the UK where supermarkets are entering the market for legal services.

In an article today on the small business portal, www.bytestart.co.uk,  UK based solicitor Giles Dixon describes the changes.

If you would like to buy some shares in one of the large City law firms or get a will written while you are in the local supermarket or WH Smith, this may soon be possible.

For a very long time the only people who can own law firms and offer legal services have been qualified lawyers, but this will be swept away by a new law that was passed in 2007 and comes into effect next year. Under the Legal Services Act, non-lawyers will be able to form ‘Alternative Business Structures’ with solicitors. This will mean that large companies such as banks or supermarkets will be free to offer legal services to their customers.

Some organisations are already reported to be getting ready for this brave new world – among them the Co-operative Group which has set up Co-operative Legal Services to support their members and offers will-writing and conveyancing services. Others, such as Tesco and the AA may follow. As the author of one recent report has said, “this is all about opening up the market by using the economies that come through scale and using marketing in a different kind of way”.

So instead of going to a high street solicitor in future, those wanting a legal service may go to a store which employs lawyers to provide services to its customers. And in time we may see new business models developing – for example a new nationwide “Easydeath Services” offering a menu including will writing and inheritance tax advice, funerals and probate services, all for pre-agreed fixed fees.

At the other end of the scale, some large city firms may decide to float on the stock market, releasing capital for the partners and opening up ownership to pension funds and other investors.

While the big bang day is not scheduled until 2011, another even more influential force – the internet – is already making legal services available in new ways – without even the need for the customers to leave their home or office. As well as low cost contract templates, wills and leases, there are services offering online divorce, online dispute resolution and mediation as well as debt collection. And by no means the most recent online service is that run by the Courts which have facilities for claims to be filed online.

The losers in this new legal world are going to include some smaller law firms, but there are opportunities for them as well. There is a limit to the number of legal services that can be commoditised – legal fees may be needed to tailor a contract template to the customer’s particular requirements, but a combination of a £40 template and some legal advice on that template is going to be a lot cheaper for the customer than going to a lawyer in the first place.

So we can envisage partnerships between solicitors and suppliers of templates developing. Indeed, some providers of templates, such as ContractStore.com, already offer customers a limited legal service, using the lawyers who write the templates sold from their website. Others are developing packages that involve a lawyer finalising a document that is initially generated online by the consumer sitting at home.

Commercial deals and complex disputes will always need support from qualified legal specialists who can advise on strategy and negotiate on their client’s behalf.

As for commoditised services, there is a limit to what they can do and they do not always come with a human face. So, just as those wanting quality food will go to a farmers’ market or organic butcher rather than Tesco, so many people will still prefer to go to a solicitor rather than Tesco Law Ltd.

About the Author

Giles Dixon is a solicitor, managing director of ContractStore.com

www.bytestart.co.uk Posted May 5, 2010

www.Celtar.ie