How will the business landscape look like in the future? How can entrepreneurs prepare for it?
There are three major factors that will decide the business world of the future. In the next nine years, a billion people around the world will come out of poverty. That means a billion new consumers for companies to target. Companies need to figure out these new consumers. Through a second lens, the number of billion dollar companies in India and China since 2000 has grown seven times. From 25 such companies in 2000 to around 175 today. Companies need to know who their competitors are. Often it may not be the company they think it is. And third, the business model that companies need will be quite different from the one that they have followed so far. This is a period of complete turmoil. In such a situation the fact is that we grow up with experiential learning which is a handicap. Our experiences create the paradigm we use in this complex world. The paradigm may or may not be useful. But it’s about how you interpret the world.
What does a world require of leaders? It requires four things.
1. The ability to try and become global.
2. It’s really important to stay decisive but humble.
3. Get closer to the people.
4. CEOs must really learn how to communicate.
A company in the 1920s that was in the Fortune 500 would stay in the list for 50 years, 70 years. Today it stays there for less than 10 years. If you are not alert you will be displaced. Learning organisations will live in the future.
Interpretation and the decision taken will make the key difference. Decisions are based on the paradigm you are using. Given that the world is changing so fast, you have to be as close to the decision as possible. You have to imagine the future. You can do it in two ways. One is to look at the past and then stretch your targets. Something like: ‘We’ve been growing at 11 percent, now let’s grow at 13 percent’. The other way is to try and foresee possible scenarios in the world 10 years down the line and try to be relevant then. Ask questions: ‘How big should we be? What segments should we be playing in? How do we get to that size?’ The more you carry the baggage of the past, the more it will constrain you and success could be a hindrance.
How does an entrepreneur respond to change? How do they get the companies to transform?
When Nokia sold a cellphone with a torch in it that was remarkable. Who would have thought that you need a torch in a phone. That imagination has to be there. We need to look at the world and see what we see not what we believe. Too many people just find facts that confirm their beliefs rather than challenging their beliefs. Leaders will have to become better at this. How? They have to meet consumers day in and day out. They have to see new companies coming in their space. Not as flies they will swat but as challengers that can destroy them.
If you have been hugely successful in the past, for you to adopt and adapt becomes very difficult. People will say why change. And so as leaders start to look at this world they need to get their team aligned on what it is that they all want to do. And if they decide they need to change the leader must get the organisation to answer five questions:
Change to what?
What happens to every individual in the organisation?
How will the change be managed?
Are they behind it to see it through?
If the organisation doesn’t get these answers it will not be able to transform. But even the first two questions are not easy to answer. It’s one of those periods where nimbleness, agility and recognition of historic change in the world needs to be absorbed into the DNA of the organisation and that is easier said than done.
Everyone talks about India and China getting big but what does that mean? I don’t see business models changing to adapt to the new world. The way the world has run, it has run on an imperialist model. Imperial meaning, ‘This is how things are done’. Five-seven years ago if you were to go to any client in India they would say we have to meet global class. They meant they wanted to be of the same standard as companies in US and Europe. Best in class now has to be redefined. The winners will be those who become the benchmark. Don’t look at models that were created for a different consumer, in a different era and where you competed with different competitors.
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Thanks for the excellent post. It's a very goodon Feb 9, 2012
Those are 5 of the best questions you can ask in any organization. I just finished a book called "That's a Great Question" but management consultant Greg Bustin. He's collected more than 500 questions that leading business professionals ask in their organizations. Huge help to me as I build my team and manage up and down the organizational chain. www.bustin.comon Oct 12, 2011