What are the big concerns confronting business in the next 10 years?
—Fatma Abdullah, Dubai, United Arab Emirates
Most mail we receive is about headline news—from the credit crunch to food shortages—so your long-horizon question came as a pleasant relief. It underscores an important reality that is all too easy to forget: In business, you can never stop planning for the future, even when it feels like the present requires all your attention.
Indeed, imagine if loan-giddy banks had, in recent years, planned for the day when the housing market started to contract. Perhaps we would be hearing more about record earnings right now than about write-offs. Or, imagine if Americans had planned for energy independence. Perhaps today we would be seeing nuclear plants fulfilling a significant percentage of our power needs, as in France,Japan and Sweden.
But, everyone knows hindsight is easy; you are asking about foresight. So, let us turn in that direction. Simply put, in the next decade, the global marketplace will continue to become increasingly competitive, compelling managers to make their organizations more agile, productive, innovative and technologically advanced.
Old news, right? We agree.
Most companies have spent the past few years, if not longer, grappling with the transformative impact of globalization.
So, what is actually new to add to your list of “big concerns” for the future? With all due respect to professional prognosticators, which we are not, we would add three items, based on a recent set of small-session meetings with executives in the US, Eastern Europe, West Asia and India.
The first item—and the biggest, by far—concerns family businesses, which make up a major portion of many economies. Such companies, of course, have distinct strengths. They can give employees a sense of humanity and belonging, creating engagement. And, in hard times, their cultures can be forgiving and resilient.
But, we sense a growing fault line beneath the foundation of many family businesses. The first reason is linked to the traditional family company focus on the preservation of wealth, rather than the accumulation of it. That “protect the assets” approach may have worked in less complex times, but it could prove devastating in a global environment where risk-taking and growth are essential to survival.
And then, there is succession, which has never been easy within family firms. But, today, increasing longevity means that many patriarchs are staying in power for years longer, essentially forcing a whole generation of family members into other pursuits.
“Kids” these days do not want to wait until they are 50 to take charge and have an impact. It is awkward and stultifying.
At the same time, too many patriarchs continue to hang on to the age-old practice of handing their companies over to progeny, regardless of talent. That tradition managed to work in the less competitive world, before globalization. No more.
The second item we would add to the 10-years-out list is the persistent dearth of, no, not engineers and scientists, but professional managers in the developing world.
On our recent trip to your own country, for instance, we heard CEOs of several local and Western companies say that the only thing holding them back was the ability to hire people to run their operations, from human resources to finance.
Incidentally, this challenge (like all challenges) presents an enormous opportunity for any experienced manager who has got the ambition, interest and global mindset to work abroad for several years.
Finally, we mention an item that has been with business forever, but stands to grow in importance over the next decade in that it just makes people so much less productive: corruption. We are not talking about large-scale corporate graft here—although that is awful—but the kind of ubiquitous “pay-off culture” that is the norm in too many parts of the developing world.
We understand that such cultures grow where wages are so low that people seek other sources of income. Thus, to get through the New Delhi airport, you have to slip something to the bag checkers, and to get your taxi licence in Sao Paulo, Brazil, you have to “thank” local regulators. Every bureaucrat with a stamp becomes an entrepreneur of sort. But, the existence of such shadow economies drains the life out of real ones, diverting cash, energy and hope.
Not to be pessimistic. Yes, the family business situation worries us, as do the managerial shortage and corruption. Still, business has always overcome seemingly insurmountable challenges. Tomorrow will be no different.
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