Earlier this month, more than 150 executives from scores of organizations met in New York with thought leaders from The Conference Board to talk about future readiness: how to prepare to thrive in 2025 and beyond. Here, culled from their discussions, is a to-do list for future-proofing your company.
—First, survive. This may not be easy. One in five CEOs believes their business stands a good chance of failing or being acquired by 2025. Low productivity and stagnant median wage growth are facts of life. Low-hanging fruit is gone, and with it the possibility of future operational efficiencies. The digital revolution has caused massive disruption without diffusing its benefits evenly throughout the economy. And environmental, political and trade crises render business-as-usual solutions obsolete.
—Look on the bright side. Government’s failure to deal with serious issues, coupled with pressure from millennials on companies to give back, has created an opportunity for business to step up and lead. Answers are not coming from government. If not you, then who?
—If you want to please your investors, innovate. Investors aren’t looking at your annual report anymore; they’re looking at your thought leaders. Quarterly profits, the province of short-term thinkers, are increasingly seen as a lagging indicator. Everybody you need understands that the future requires pivotal change, and pivotal change requires innovation, and innovation takes time, patience and capital.
—Plus, duh, talent. CEOs see talent as their biggest challenge. They need workers with the skills to navigate both digital and analog workplace challenges. And today’s college curricula don’t adequately prepare graduates. This is a problem for every company, as digital technology saturates every aspect of work, generating as many issues as it solves: Who will pay for 5G? What about geo-tech? These questions require advanced digital skills — plus general skills such as empathy and a growth mindset. Look to companies with solutions. IBM’s apprentice program has helped close the entry-level tech skills gap. As for the employees you already have, future-proof them by normalizing learning and empowering creativity. That means making it OK to fail.
—If you want to please your employees (and you do, because, duh, talent), fix your work environment. Work is being decoupled from location, description and rules. Systems and cultures that worked last year won’t work next year. One obsolete system: traditional legal billing. When law students got together and used best practices to collaborate, they drastically reduced billable hours, saving clients money but costing the firm. One obsolete culture: annual performance reviews.
“Annual” anything means it’s not happening often enough. Some companies are moving to daily pay: makes sense, considering how much of the workforce is on flextime anyway. Bottom line: Value your employees as much as you value your customers. Take care of the former, and they will take care of the latter.
—Aim for your customers’ hearts, not just their wallets. Customers are spending now, but that is no guarantee (given trade volatility and the prospect of recession) that they will keep spending. Hook them with ROE: return on emotion. Surround your products with emotions and experiences that heighten value. In a world where consumer lines blur, where 6-year-olds and 66-year-olds have cell phones, the right animating principle, one that is both sincere and organic, will add emotional heft, differentiating your product.
—All roads lead to sustainability. Corporate social responsibility is an established differentiator for customers, who gravitate toward companies that show they care through environmental, social and governance activities supporting sustainability. But ESG is more than a way to attract customers and talent; it may save the world. In France, meeting the Paris Climate Accord goal for carbon emission would require every household to: drastically lower clothing purchases, buy only local food, run a zero-waste home, lower temperatures by 20 percent, carpool, use only LED lights, and stop flying, buying appliances, and eating meat and fish. In other words, climate solutions are unlikely to come from behavioral change. They will come from innovations such as P&G’s new cold-water detergent pods.
—Corporate boards will be core. In a future characterized by fewer rules and more flexibility, board service must be a calling. Future boards will feature increased transparency, tailored skills, more data-driven decisions, more engaged directors — and more diversity: nature’s risk management tool and a proven factor in enhanced corporate performance.
—At the end of the day, future values look a lot like values that worked in the past. Capitalism is at an inflection point. Technological change is happening so fast that the old rules governing it no longer apply, and government is behind. But some things remain the same. Companies that drive values for the long term, help the communities where their employees and customers live, abide by authentic animating principles that translate to engaging mission statements, and have goals that include but are not limited to profit, will set themselves up to as future-ready thinkers. They will survive — and even thrive — in the frightening future.