Four Economic Megatrends Businesses Can’t Afford to Ignore

Businesses tend to think and act in the now and the quite soon. Maintaining and growing levels of demand, utilizing cost-effective supply chains, maintaining customer satisfaction and service being examples of dominant, daily subjects and concerns for many.

But for most businesses, certain longer-term economic trends that will shape the global economy over the coming decades deserve deeper strategic evaluation and consideration as to their longer-term impact; they may even prompt a complete re-think of some business products, units, or practices.

In this article, the second in our ‘Enterprising Foresight Series', we consider four of the most significant economic megatrends that will increasingly affect businesses globally within the next decade and beyond and present some practical ways in which companies can embrace the future.

1.?The Global Digital Economy

In the last article, I mentioned the significance of the?OECD’s digital policy framework ?and how the public and private sectors will be affected by the rapid move to digital stimulated by such charters. Technology is poised to transform businesses and industries alike and is already doing so at a rapid rate. The pace will accelerate substantially in the coming decades and, as technology advances, businesses will need to adapt to a world in which digital technologies are increasingly driving economic (and business) growth. A company’s adoption of digital will not be a ‘nice to have’ it will be the norm and a key competitor differentiator.?

In short, companies need to identify suitable opportunities and invest in their digital capabilities, such as data analytics, artificial intelligence and automation, to remain competitive and increase productivity. This in turn will help drive down business costs and improve revenues. Suitable approaches include:

• expanding and developing internal business processes and output capabilities around ‘digital’,?
• identifying relevant technologies and opportunities to partner with relevant providers; and
• joint-venturing or acquiring specialized companies.

Companies can also explore new business models, such as digital services and online marketplaces, which allow the creation of new revenue streams and a reach to new customer segments.

2.?Changing Geo-Economics

As vast economic powerhouses such as China, India, Indonesia and Brazil continue to grow, businesses will need to find ways to tap into these new markets to drive growth. This will require companies to have the ability to navigate each market’s unique cultural, regulatory, and logistical challenges.?

The nuances of different demand markets are important – how and who to do business with. Companies can start by identifying opportunities in these emerging markets through:

• identifying priority market segments where brand and product extension opportunities lie and are accessible;
• researching the market’s trends;
• understanding a market’s consumer habits/preferences; and?
• building commercial ties and foundational relationships with the right local partners.?

A great way to understand a new market is to establish a local presence there – setting up subsidiaries or forming initial joint ventures allows firms to show intent, and ‘learn on the ground’ before making bolder investments. It also provides the opportunity to work with local regulatory bodies to understand and work within the relevant regulatory environment.

3.?A Revolution in Productivity

Many commentators today believe 2023 will be the year when AI and automation really start to have a measurable impact on work practices and productivity. Machines have been used to improve productivity in the manufacturing sector for centuries, but we are beginning to see the real impact AI and automation can have in the services sector. Think about it: if you can use machines to double or treble, or even quintuple your firm’s output using simple technology to take on more, often menial or relatively formulaic tasks, it would be absurd for businesses not to adopt it. Competitors will have to follow, or risk folding.

In practical terms, identifying and deploying ways to enhance productivity using technology is increasingly going to become a necessity. Approaches therefore include:

• embracing technology to create new opportunities for customer value-add;
• modifying or developing new products and services;
• automating repetitive tasks to improve efficiency;
• repurposing human capital to strengthen interaction and intervention (where cost-effective);
• transitioning the skills and capabilities of the workforce; and
• focusing on training programmes, and opportunities for re/up-skilling.

4.?Sustainability First

For most businesses, their clients and other key stakeholders will increasingly demand appropriate ‘call to action’ measures that address global environmental and social concerns. As tools to measure a firm’s carbon footprint and environmental impact improve, a future where consumers rapidly switch demand habits to suppliers that better match their expectations?is not just possible but highly likely. Where does your company want to be when this happens, and how prepared are you?

Most companies need to address three things, primarily: action, off-setting and communication.

Many firms can and are already using valuable tools to measure environmental impact across their entire end-to-end operations and sometimes their supply chain and product usage cycle. Companies can adopt practical ways to reduce their negative environmental impact by implementing sustainable technologies and practices, including:

• harnessing renewable energy,?
• adopting energy saving and efficiency technologies and methods; and?
• implementing?circular economy?principles and practices - sharing, leasing, reusing, repairing, refurbishing and recycling materials and products for as long as possible;?
• developing more sustainable business models; and
• making sure that the business clearly and effectively communicates achievement of its sustainability goals to reassure and retain existing customers and investors, and by so doing, attracting more of both.

At Newfields Consulting, based in the Dubai International Financial Centre (DIFC), we help companies provide strategic consulting and management advisory services that are tailored to the unique needs of our clients to help them embrace these economic trends and opportunities. Whether you are looking to expand into new markets, build a more sustainable business, or develop new skills and capabilities, we can help you develop and implement corporate strategies that will enable you to succeed in the ever-changing global economy.

Reach out to us for complimentary discovery session and collaboration opportunities.

Stefan Hickmott, CEO

[email protected] ?|?www.newfieldsgroup.com ?| +971 4 343 4001