10 Major Shifts facing Business Today

Significant shifts facing business today.

This week I thought I’d take a deeper look at some of the key challenges facing business today.???As we always said in innovations fall in love with the issue first, be curious and dig deep to understand - this helps you really get to the core of what’s needed.

Also, sometimes (a lot of the time) you don’t need to be clever and re-invent the wheel you just need to take advantage of the knowledge that is out there and make sense of it for you and your business.??In this instance I’m going to reference a recent report published by McKinsey & Company entitled?'The State of Organizations 2023' I’ll make it clear in this article when I’m quoting McKinsey and what’s my perspective.

Purpose

The purpose of this Linked in newsletter is to inspire and enable business owners, leaders and managers like you to make proactive choices and changes that support you and your teams on your journey to success and beyond.

In this one I’ll be encouraging you to think about which of the shifts going on in the world will impact your business now and or into the future and decide what action to take.

Introduction

Business owners and leaders have had much to contend with of late in a highly volatile and uncertain environment, contending with the pandemic and then the ensuing economic downturn, rising inflation and political disruption and its knock-on effects.???“Less obviously—but no less importantly—business leaders are having to address a range of organizational shifts that have significant implications for structures, processes, and people. These shifts are both challenging and harbingers of opportunity, depending on how organizations address them.”?

So, what are the right responses to these shifts???How can leaders and their teams change???Where do they start?

McKinsey conducted a survey of over 2,500 business leaders to discover more and help inform the appropriate responses to the changes.??“Only half say their organizations are well prepared to anticipate and react to external shocks, and two-thirds see their organizations as overly complex and inefficient.”

The State of Organizations 2023?report pinpoints the most important people, procedural, and structural shifts that organizations are grappling with and seeks to provide some ideas and suggestions about how to approach them.?

“Ten shifts that are transforming organizations— and what to do about them,?from the State of Organizations 2023 report:

Through the State of the Organizations Survey, conversations with CEOs and their teams, and the findings of recent McKinsey research, we have identified ten of the most important organizational shifts that businesses are grappling with today.?

1) Increasing speed, strengthening resilience:

Volatility is a feature, not a bug, in today’s organizations, yet half the respondents in the State of Organizations Survey say their organization is unprepared to react to future shocks. Those able to bounce forward—and quickly—out of serial crises may gain significant advantages over others. To be able to do so requires organizing for speed of response, giving power to your people, and developing a culture of continuous learning.?

2) ‘True hybrid’: The new balance of in-person and remote work:?

Since the pandemic, about 90 percent of organizations have embraced a range of hybrid work models that allow employees to work remotely from off-site locations (including home) for some or much of the time.?What’s important is that organizations provide structure and support around the activities best done

in person or remotely.?By remaining open to the entire universe of options for how, when, and where employees work, including with a reset of performance expectations,?“true hybrid” organizations can distinguish themselves as destination workplaces.?

>4 of 5 employees who have worked in hybrid models over the past 2 years want to retain them?

3) Making way for applied AI:?

AI doesn’t just have the potential to supercharge a company’s operations; it can also be used to

build better organizations. Companies are already using AI to create sustainable, long-term talent pipelines; drastically improve ways of working; and make faster, data-driven structural changes to their organizations. As organizations embrace the opportunities offered by AI, they need to focus on embedding its use in corporate culture,?hiring, and developing AI-savvy leaders, and being thoughtful about AI-related risks and ethical concerns.?

4) New rules of attraction, retention, and attrition:?

People are revising their attitudes both toward work and at work. Employees who quit (or who are “quiet quitting”) say it isn’t just money,?work–life balance, professional development, or purpose that will bring them back to work?in 2023: it’s a combination of all those things. In Europe, for example, 35 percent of people leaving jobs cite unsustainable performance expectations. Organizations can respond by tailoring employee value propositions to individualized preferences in ways that can help close the gap between what today’s workers want and what companies need.?

5)??Closing the capability chasm:

Companies across sectors often announce technological or digital elements in their strategies without necessarily having the right capabilities in place to integrate them. To achieve a competitive advantage, organizations need to build institutional capabilities—that is an integrated set of people, processes, and technology that creates value by enabling an organization to do something consistently better than its competitors do. That means plugging gaps in their core activities, which are often the result of insufficient resources or inconsistent commitment.?

Only 5% of respondents say their organizations already have the capabilities that they need.

6)??Walking the talent tightrope:

Business leaders have long walked a talent tightrope—carefully balancing budgets while retaining key people.?

In today’s uncertain economic climate, organizations need to focus more on finding ways to match top talent to the highest-value roles. The idea isn’t new, but it’s the right one in this era of hybrid work models, increased employee mobility, and skill shortages. McKinsey research shows that, in many organizations, between 20 and 30 percent of critical roles aren’t filled by the most appropriate people.?

The highest performers in a role are 800% more productive than average performers in the same role.

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7) Leadership that is self-aware and inspiring:

Leaders these days are necessarily focused on short-term responses to crises,?but they also need to think longer term and cultivate fit-for- purpose behaviors.?They need to be able to lead themselves, they need to be able to lead a team of peers in the C-suite, and?they need to have the leadership skills and mindset required to lead at scale, coordinating and inspiring networks of teams. That requires leaders to build a keen awareness both of themselves and of the operating environment around them.?

Only 25% of respondents say their organizations’ leaders are engaged, are passionate, and inspire employees to the best-possible extent.

8)??Making meaningful progress on diversity, equity, and inclusion:?

Many organizations are focusing on diversity, equity, and inclusion (DEI), but in many

cases, the initiatives aren’t translating into meaningful progress.?What’s often missing is

a clear link between DEI strategy and the business strategy.?One path forward is for leaders to be more systematic early on, considering the objectives and desired level of impact from their programs. To realize DEI aspirations, leaders will need to identify opportunities for making progress within their organizations, as well as for improving their external communities and society.?

9) Mental health: Investing in a portfolio of interventions:?

Nine of ten organizations around the world offer some form of well-being program. But global health and well-being scores remain poor, despite well-intended interventions. Research highlights the link between reports of poor mental health and well- being and organizational issues, including attrition, absenteeism, lower engagement, and decreased productivity. In 2023, organizations need to refocus their efforts on addressing the root causes of mental-health and well- being challenges in a systematic way; one-off and incremental fixes won’t be enough.?

Employees facing mental-health and well- being challenges are 4×?more likely than others to want to leave their organizations.

10)??Efficiency reloaded:

In today’s uncertain business climate, companies are refocusing attention on efficiency measures—more than one-third of respondents in our survey list efficiency as a top three organizational priority.?Boosting efficiency is about more than managing immediate crises or getting the same work done with fewer resources. Deploying resources more effectively to where they matter the most promises substantial benefits, including improved organizational health, higher shareholder returns, and better and faster decisions.?Being efficient often means placing more trust in your organization and empowering employees."

Questions to ask and Actions to consider for your business:

1) How can you increase speed & strengthen resilience?

How can you adopt a fully agile operating model???Leaner teams with the ability to focus on what really matters.??SME owners you’ll already have lean operating advantages over some of your larger corporate competitors.

Can your team members be dynamic and flexible to do different roles when required??

How are you equipping your leaders, managers and team with the necessary skills and responsibilities.??Remember to operate quickly teams need to be empowered.?

Resilience – here I believe you are looking at the business/brand and the resolve of the individuals and systems that run it.??Can they all stand the pace of change???For the individuals how do you proactively prepare them to cope?

“It’s important to find and promote adaptable leaders who don’t just react when faced with, say, a natural disaster, a competitor’s moves, or a change in team dynamics. They take the time to coach team members through the change. They catalyze new behaviors, and they develop capabilities that can help set the conditions for both a short-term response and long-term resilience.”

2) How do you embrace ‘True hybrid’ and turn it into your competitive advantage??

Attracting and retaining staff is more important than ever and I believe as the report suggests that true hybrid organisations can distinguish themselves as destination workplaces.??Couple this with a growing work anywhere mentality – then the winners will be those who enable and empower and as a result will be able to harness the best talent.??Clearly not all industries are created equally, Hospitality is largely dependent on in person working.??To such industries I’d ask, what more do you need to do to attract the right people????Where could you enable flexibility?

“True-hybrid organizations create policies, workflows, and documentation that help employees understand which activities are best done in person and whether those activities are best carried out in real time or asynchronously (that is, with all team members being online when it’s most convenient for them rather than simultaneously)”

For true hybrid effectiveness people will need to adjust.??How are you equipping your leaders and managers with the mental and emotional skills to lead remote teams.??Communication is a obvious physical barrier, you are likely to need to enhance within your teams for them to be even more effective.

Tips:

·???????Be clear on performance expectations, focus on results & output.

·???????Set clear rules and guidelines on behaviours and where people work.

·???????Test, learn and adapt.

3) How do we make way for applied AI?

Most people I speak to about AI fall into one of two camps – they are excited by it, or they completely dread it. (Sometimes both). How do you feel about it???Whatever you feel, it is here and will be embraced by those that choose to learn, adapt, and change.??There is competitive advantage to be gained, will you lead the change? Follow the change or get left behind?

Ask yourself where could AI make a difference????Even if you don’t have all the answers, still ask the questions then find someone who can help.?

“Embedding AI in corporate culture - AI-first organizations are focused on building a perpetual-learning culture and teaching AI tothe whole workforce. That’s the only surefireway to drive widespread acceptance of AI. The organizations that report the highest returns from AI are nearly three times more likely than others to report using a variety of capability-building programs (such as experiential learning, self- directed online courses, and certification programs) to develop technical employees.”

4) What do we need to do differently to attract and retain top talent?

“Gone are the days when simply focusing on compensation, job title, and financial security was enough to keep most of a workforce satisfied.”

First is simply to meet the changing needs of the workforce and design jobs and environments that meet expectations on?work–life balance, professional development, or purpose.???

Your people remain a great source of competitive advantage – They run the systems that look after your customers that generate the profits.

The report suggest that companies can gain competitive edge with a dual focus on people and performance – challenging, nurturing and collaborating.???What are you doing to empower your teams and leaders to succeed in a motivating and rewarding way????Being human and developing human (soft) skills I think is key here in combination with applied tech as per the AI point above.

5)??If the skills needed to create value are changing, how must we adapt?

There are a couple of skills gaps – one is the obvious lack of skill on the market who have the necessary skills in certain functional areas e.g. AI.???The other less obvious, but potentially key is the abilities we’ve already touched on across the business to make quick decisions, think creatively, communicate and all the other important soft skills.??(I hate the term but use it as you know what I mean – I’d should say critical human skills, that compliment a world in which AI plays it’s part).

Have your team all the technical and soft skills you’ll need them to have to propel you quickly into the future?

The report briefly introduced the ‘VECTOR’ model, to help guide finding the right formula:

·???????Vision for what want to be known for & Leadership committed to the journey.

·???????Employees talent system to support the vision.

·???????Culture and Mindshift to embrace change and make it stick.

·???????Technology – utilising tech and data in a way which scales

·???????Organisation – Structure and ways of working to give clarity on roles, responsibilities, and accountabilities.

·???????Routines – Practices to embed new processes into the business.

6)??How do we get the balance right between short-term protection and long-term success?

This is not new, just even harder in today’s climate.??Getting really clear on which roles create the most value within the business is key.?Then aligning the best/right people to those most important positions.??N.B. Its always good to look with a future lens on this and the position that generates the most profit today, could change in the future and you may want to direct your talent accordingly.

7) Creating Leadership that is self-aware and inspiring?

“Organizations can only be as resilient as their leaders, who need to lead themselves as well as their teams.”

“For today’s leaders, the essential task comes in three layers: they need to be able to lead themselves, they need to be able to lead a team of peers in the C-suite, and they need to be able to exhibit the leadership skills and mindset required to lead at scale, coordinating and inspiring networks of teams and ensuring that their organization functions as a cohesive whole.??That’s a big ask of any single human. For any leader, it requires building a keen awareness both of themselves and of the operating environments around them.”?

How are you investing in yourself and your leadership team?

Most important elements of leadership culture (Taken from the report) – To rank yourself and or the team against:

·???????Role modelling

·???????Inspiring others

·???????Developing people

·???????Setting expectations

·???????Fostering team discussions

·???????Communicating in a convincing and charismatic way.

“For execution, organizations need to foster an environment in which teams are working on multiple initiatives in parallel—all with a mindset of discovery. The leader’s perspective here changes from that of a controller who operates through detailed analysis and planning to that of a coach who operates through short cycles of quick decision making, experimentation, and learning. Under this form of leadership, an organization can better respond to challenges and uncover opportunities. It can stop experiments that underperform and scale up those that are thriving.”?

8)??How to make meaningful progress on diversity, equity, and inclusion?

“McKinsey research shows that more than 70 percent of companies surveyed express transformative DEI aspirations, but less than half (47 percent) have the infrastructure in place to realise these aspirations”

Have you the right infrastructure in place?

How well is your DEI linked to your strategy????What is the desired impact?

“Setting a DEI vision will require making an honest assessment of how diverse, equitable, and inclusive an organization is currently and how much further it needs to travel. A mix of DEI, HR, and business leaders should own this process. C-suite leaders, business unit managers, functional managers, and others across the organization will need to define the vision for DEI in the workplace and set clear aspirations and goals for achieving that vision.??Leaders won’t be able to act on all DEI initiatives at once, so they should develop an action plan that prioritizes the programs based on ease of implementation and level of impact.”

9) Taking a front foot on Mental health?

“Organizations need to refocus their efforts on addressing the root causes of mental-health and well- being challenges in a systematic way; one-off and incremental fixes won’t be enough.”

How can we avoid overwhelm amongst staff and address cause not just the symptoms???This could be about training for the leaders and managers, not just stickly pasters to hand out to the employees.???Take a critical look at your business and ask what you would like to improve.???Point no fingers, simply work together on finding the right solutions together.

Examples you may wish to adopt:

·???????Resilience training & stress management.?

·???????Programs to boost office community, connectivity, communications, and trust.

·???????Policies to reduce burnout.

·???????Peer to peer support programs

·???????Coaching and or counselling

10)??Achieving next level Efficiency?

“Efficiency is back at the top of the company agenda, with a reinvigorated mandate to create more efficient organizations that place resources where they matter most.”

Is your business model still fit for purpose in today’s changing landscape?????Are there ways to do things differently – faster and more efficiently???

How can you empower and train your team to make faster decisions better?

Conclusion

Any one of these ten shifts can be a complex undertaking in its own right.???All ten together and it’s no wonder some leaders and overwhelmed!??I shared them all here to prompt your awareness and thinking.??I suggest your first step if to reflect on where your business is right now and where it is heading.???Then you can develop a clear perspective on where changes are required and focus there.

Action

So, what changes do you need to make?

And what actions will you commit to take?

The McKinsey report ‘The State of Organizations 2023’ goes into a lot more detail on each of the ten areas.??It also brings in the perspective of some key industry leaders sharing their perspectives. You can download if for free from their website.

Take what is helpful and ignore what is not!

It’s part of my DNA as a curious individual, coach, and strategic innovator to ask questions, so expect more as we go to encourage you to think and act differently.???I’ll sometimes look at things from a completely different perspective simply to provoke and encourage you to look at things differently.???You must understand it’s not about me being right, my questions when coaching are without judgement, they are for you with good intention.???You are then free to choose what you ignore and what is useful for you to keep and do something with.

If you’ve any questions or areas you’ve like me to cover in future episodes let me know.

James Gentle ?

Your Catalyst for Change?

In Business for Life

I believe that how you think about change can stand you out as a leader.

Love to hear your thoughts / To pick up the conversation over a coffee.