What a year it has been – and what a year that lies ahead! As we said goodbye to FY21/22 at Deloitte on May 31st, we can look back at a year that brought many changes for our clients and for ourselves.
The coming 12 months will most likely be no different, but while the talk often revolves around market instability, inflation and the energy crisis caused by the events in Ukraine, there are other forces of change to consider that will also dramatically affect the way to do business and, inevitably, undermine some long standing truths and orthodoxies that have shaped our thinking and choices for decades.
Here are three critical discontinuities that all have the potential to reframe our perspectives in 2022/23:
1. Radical technology: The next wave of exponential progress
Over the last 60 years, the primary focus of technology has been digital computing, which has changed the world at an accelerating pace, driven mainly by the exponential force of Moore’s Law, which in 1965 predicted that the number of transistors on a microchip would double every two years. Although that force is now reaching the limits of the physical law, new technologies will likely enable change beyond our imagination.
We are already seeing the contours of new digital worlds. For example, technology is increasingly conjoining with life and coming inside the human body to detect, prevent and treat disease. Wearables and interoperable health data are already improving care, enabling earlier diagnoses, and increasing not just life spans but also health spans.
Equally interesting, technology is enabling an increasingly perfect and seamlessly connected replica of planet Earth. There is a great deal of excitement (and concern!) around the metaverse, the communal cyberspace that is already emerging today. In the coming year, technology will likely continue to create an increasingly comprehensive digital twin of our world, enabling new forms of communication, innovation, prototyping and community formation.
Technology also continues to be at the centre of geopolitical hostility. It is likely that cyberattacks will continue to threaten financial and physical infrastructure, alongside sustained attempts to deploy disinformation. However, activated wisely, technology could also lead to global cooperation and greater security and peace.
And finally, technology will continue to be used to protect and heal our planet, supporting new smart and adaptive infrastructure, carbon capture, clean energy and other major sustainability innovations as we strive to fight the climate and energy crisis.
2. The shift to stakeholder capitalism: The inevitable internalisation of externalities
Climate change, social injustice and an increasingly unstable global environment are already putting pressure on companies to build sustainable business models. No wonder, then, that more and more business leaders are embracing a more balanced model of stakeholder capitalism that includes the interests of customers, employees, suppliers, communities and the natural environment.
For many years, negative externalities were largely accepted as a trade-off for the remarkable economic growth that market economies have generated. But their adverse impacts have grown to be alarming, and today companies everywhere must innovate to dramatically reduce externalities while continuing to improve human life.
Further, it will mean holding ourselves to the highest standards of accountability and transparency in both our communications and our conduct across a broadening set of stakeholders. Many leaders will embrace this enormous task as a core part of their personal and business missions.
3. The decline of “the theory of the firm” and rise of “the theory of the ecosystem”
Digitalisation is steadily dissolving old structures by empowering powerful cross-industry and cross-firm collaboration. Previously distinct industries are converging to form dynamic human-centric ecosystems that are not organised around the capabilities of the last century. Instead, they address fundamental human and societal needs in more effective, precise, accessible and sustainable ways.
While every business will continue to need its own strategy to inform its choices and priorities, it is becoming increasingly critical to explore collaborative opportunities of relevant ecosystems. However, this will not be simple. Strategy in a fast-changing world is already hard enough; collaborating with multiple entities to create evolved, shared, ecosystem-wide strategies might feel like playing three-dimensional chess. New strategy tools and methods will be required, and new relationship norms must be evolved.
Forging a better future
The above mentioned discontinuities are all reshaping the landscape of business in ways that are deep, structural and enduring. The implications will vary from business to business, and each will have to define their own path forward; however, it’s clear that we will likely need to tear up some of the current playbooks as many of today’s orthodoxies fade into history.
My hope is that the next 12 months will be both productive and sustainable, profitable and purposeful, logical and human-centric, competitive but also deeply collaborative. By embracing renewed intentionality in our businesses, hopefully we will all lead with courage, empathy and creativity as we help bring this future about.
I will be thinking about that this summer.
As a part of the Strategy & Operations practice Tore has worked with analysis, development and implementation of operational strategies. Tore has deep experience with aligning business models to changing market demands through optimisation of business processes and aligning systems, organisation and governance accordingly. He has industry experience from manufacturing, transportation, consumer products and energy. His main focus is on on the operational core processes but he also covers administrative support processes. As a program manager Tore has been leading transformation projects for international clients heading multiple parallel projects and reporting directly to executive committee members. His responsibilities cover everything from initiating assessments, identifying opportunities for improvement to building business cases and following up by designing solutions and driving teams through implementation.