As business leaders assess the ongoing operations and results of 2015 and at the same time engage in the strategic planning process for 2016, one of the many elements of focus is global business trends that will impact future business results. Readers of this blog know that Advantexe Learning Solutions has the opportunity of working with dozens of large global clients. During our engagements, we accumulate research and identify trends that will help our clients achieve their results by developing the business acumen and business leadership skills that will be needed to address the impacts of these trends.
The following is an overview of five critical global business trends that will require new business acumen skills.
1. International sales will increase while domestic sales will decrease
It should be a “no-brainer” for most organizations to realize that growing populations outside of the United States are going to create demand for more products and services. However, many successful US organizations still are surprised by this and haven’t reacted very well in terms of their structure or talent development strategies. For many US organizations, there will be a pivot point where international sales will increase to more than 70% of total revenues. These are the organizations that are well prepared and have developed the structures, tools and skills to take advantage of the opportunities. Unfortunately, the unprepared organizations will become stagnant and overall sales will be flat. As global competition increases, these US companies are the organizations that should be desperate for global acumen, strategic thinking, financial literacy, supply chain management, and international marketing skills.
2. Moving from a sustainment focus to a production focus
Things were really bad in 2008, 2009, and 2010. By 2011, the recession was over and for most parts of the world the global economy began slow and steady growth. As the global economy continued this steady growth in 2012-2015, many companies invested their resources in sustaining the status quo. This sustainment philosophy manifested itself in tactics such as “flawless execution,” “deliver what we have sold,” and “don’t screw it up.” In 2016, our prediction is that a new focus on production will emerge. One of the most significant catalysts of this trend is the shifting of manufacturing back to the US from Asia. Organizations moving from a sustainment focus to a production focus will need business acumen skills to understand costs structures, raw material charges, capital budgeting and management, and financial management to make the right business decisions.
3. High quality to high efficiency
Product leadership will always be a critical value proposition and strategy differentiator and every market will have a mix of companies with product leadership, customer intimacy, and operational excellence. Our research indicates that many large companies have invested heavily in innovation and quality over the past 3-5 years and now are under more pressure to increase shareholder value by increasing profitability and cash flow. In order to do that, there will be a subtle shift from a high quality focus to a high efficiency focus. This will require a unique set of business acumen skills so that leaders understand how to increase margins and cash flow through greater efficiencies while still being true to their overall value proposition.
4. Evolve from an “innovate-produce-execute” mindset to a “plan-source-deliver” mindset
It is a classic and successful model – especially in tough economic times – to rally around an “innovate-produce-execute” mindset. Leaders can build a plan and, more importantly, motivate and engage employees to understand and execute this approach. As we mentioned previously, many organizations have invested heavily in R&D, manufacturing capacity, and innovation over the past few years at the expense of profitability. As these organizations evolve to being more efficient, they will evolve their strategy to a “plan-source-deliver” approach. New business acumen skills will be needed in the areas of planning, resource and supply chain management, and operations to deliver expected value to customers and returns to shareholders.
5. Shift from a deep customer focus to a deep value chain focus
The last significant trend that we identify is consistent with the previous trends of becoming more efficient: moving from a deep customer focus to a deep value chain focus. Again, this does not mean organizations will forget about their customers; it means that over the past few years there has been a significant investment in understanding and delivering value to customers which has reached a saturation point. The marginal return of investing more in a deep customer focus is not as strong as taking the same investment and enhancing the value chain to increase efficiencies and profitability. This shift will require new business acumen skills in understanding the value chain, strategic selling skills, and specific skills such as strategic business negotiations.