Each year I interview hundreds of business leaders about innovation in their companies, and their outlook on the future. One question almost always gets asked: “what’s keeping you up nights?”
What I’m hearing of late is about the sudden rise in business uncertainty. Is the decade-long economic recovery about to end? Will the U.S. and China come up with a trade agreement? Will there be yet another government shutdown?
The challenge of innovating, planning and executing during this period of economic and geopolitical turbulence is causing more than a few sleepless nights. And yet there’s another trend I’m hearing about that has truly surprised me over the past months. It surfaces when I ask: Do you feel your organization is being disrupted right now, and if so, by whom?
Responses to this question have almost universally been “yes.” The causes vary widely. They range from “we’re losing the talent wars” to “low cost competition from China” to “fin-techs chipping away at our loan business” to “Amazon has entered the our market” to “index funds” to “retail apocalypse” to “we are becoming irrelevant to our customers” and many more.
The business leaders I survey increasingly want to know how to out-think, out-innovate, and outmaneuver disruptive threats and competitors. They want to understand what disrupted companies failed to understand in time. They want to know how to look, think and act ahead of the curve.
What I focus on are variations of a simple premise: You and I can thrive amidst greater and greater uncertainty, but to do so leaders will need to master a new mindset, skillset, and toolset. What I often call developing an Opportunity Mindset enhances one’s ability to manage in the midst of chaos, pounce on fast-developing trends, and see farther up the road.
In all, there are over 30 important Driving Forces of Change that need to be monitored, ranging from unstoppable demographic forces to technologies such as artificial intelligence, virtual reality and the Industrial Internet of Things. The critical thing is not so much immersion in the trend itself, but what we do proactively and creatively with the particular trend that matters most. This “trend-driven innovation” in my “Managing the Future: Capitalizing on the Driving Forces of Change” seminars, and industry group forums.
Here are six Driving Forces of Change to get your Opportunity Mindset about opportunities for innovation for your organization:
Driving Force #1: The Talent Wars Will Heat Up
When polled, CEOs acknowledge their growth is now being impacted by not only uncertainty in the economy, but by workforce management challenges. The “War For Talent” will demand increased attention moving forward. Manifestations of this mega-trend are showing up everywhere: positions that cannot be filled, applicants that lack the necessary skills, and a decline in employee engagement and work ethic. Meanwhile, experienced workers — aging Boomers for the most part — are retiring at the rate of 10,000 a day and taking their knowledge with them. Result: talent competition will be a defining trend going forward, even if the economy softens. Smart firms will revamp and rethink recruitment, on-boarding, hiring, wages, culture and retention strategies for competitive advantage.
Driving Force 2. Millennials are now the dominant generational cohort. Get ready for Generation Z.
Not only are they the majority generation (92 million members) in the workplace, Millennials are the driving demographic cohort in the marketplace, eclipsing Generation X and Boomers in buying power, economic influence, and political clout. The oldest Millennials are in their mid-30s and moving forward fast: getting married, starting families, founding startups, buying houses, investing for retirement, and paying off those burdensome student loans. Millennials are ethnically and racially diverse, open-minded, and tech-savvy. They are not just cutting the cord to cable television, but to businesses, brands, and workplaces that are unresponsive to their needs. With the unemployment rate at a 49 year low, look for higher rates of job-jumping in 2019, as Millennials seek better pay and career advancement.
Driving Force 3: The Fourth Industrial Revolution is a Game Changer. Here’s how to go from lagging to leading Industry 4.0.
Digital disruption has already reordered the playing field in industries ranging from college textbook publishing to cable television to advertising. But the Fourth Industrial Revolution (Industry 4.0) is an even higher magnitude Driving Force of Change still in its infancy. The first three industrial revolutions promulgated steam power, electrification, mass production and early electronics. The Fourth Industrial Revolution (Industry 4.0) is about the acceleration brought on by 50 years of Moore’s Law (a doubling of capacity every 18 – 24 months). It is also about the convergence of an array of technological innovations, from the Industrial Internet of things to virtual reality to drones to artificial intelligence, to biotechnology and beyond. To profit from 4.0, businesses and their leaders will need to think ahead of the curve, and revamp the way they do strategic planning and create cultures of innovation. Nothing less will keep up.
Driving Force 4. In the Age of Amazon, offering Real Time Convenience is becoming table stakes for staying in the game. Here’s how to benchmark your firm, and innovate convenience innovations.
Amazon’s Same Day Delivery service and its artificial intelligence-based Anticipatory Shipping program are examples of real time convenience innovations now transforming consumer and B to B buyer expectations across industries. Businesses that are mired in “the way we’ve always done things around here” will falter. But those that treat this Driving Force seriously and think ahead of the curve will win. Among my recommendations for capitalizing on this driving force: challenge time-based assumptions. Seek to eliminate customer waiting, friction, cumbersome forms and procedures, whether online, in-store or over time. Look for the Amazon Effect to impact more and more industries, and be prepared to lead your firm in pioneering convenience advances while there’s still time.
Driving Force 5. Artificial Intelligence has entered the age of implementation.
All technologies go through a period of development before they go to a period of application. How might we take advantage? How might competitors gain advantage by moving first with this trend? Examples:Real estate broker Coldwell Banker is experimenting with A.I. to target classes of likely buyers for a specific property. Fidelity is finding ways to apply artificial intelligence, computer algorithms, and voice recognition software to the hidebound world of money management and investing. Every technology goes through the Discovery Phase then enters the Implementation Phase. This is where the action will be in 2019 and beyond: forward thinking firms will begin to automate routine office tasks like accounting and billing, but then seizing the larger opportunities: looking across your entire enterprise, and using A.I. to enhance customer experience, get better at sensing demand trends, automate machines, and serve customers in new ways.
Driving Force 6. Social Media is heightening decline of social distrust. Here’s how to manage this trend in your business and career.
While the fallout from Facebook’s breach of trust with its users continues to reverberate around the planet, it must be noted that “social trust” has been declining since 1972, when research into the topic first began. And in fairness, Facebook has plenty of company in destroying what’s left of social trust. Examples abound: Wells Fargo employees created two million phony accounts, charged improper and unauthorized fees, and withdrew money from customers’ accounts. A data breach at Equifax caused the release of sensitive personal information on 143 million Americans. Volkswagen was fined $30 billion for cheating on emissions requirements. It doesn’t take a clairvoyant to see that trust will be a huge issue going forward, as Millennials, among others, begin to distrust entire industries (financial services, Social Security system, airport car rental operators, insurance companies, etc.) and make consumer choices accordingly. Ignore this Driving Force and the trust issue could work against you. Embrace it and innovate new ways to prove trust, and you turn a pitfall into a strength. Example: Uber and Lyft have a feedback mechanism built into their apps, and it allows both customers and drivers to rate one another, encouraging mutual good behavior, and building trust.
Brainstorming question: how can you and your organization turn this Driving Force to advantage? How can you verify and insure trust, in customer data, privacy, employee confidentiality, etc.?
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Robert B. Tucker is one of the most in-demand innovation speakers and workshop leaders in the world today. A former adjunct professor at UCLA, Tucker is president of The Innovation Resource, a consulting firm specializing in helping leaders and their organizations invent higher growth futures. The author of seven books, his international bestseller Driving Growth Through Innovation: How Leading Firms are Transforming Their Futures was translated into 17 languages. As a thought leader in the growing Innovation Movement, Tucker is a frequent contributor to publications such as the Journal of Business Strategy, Harvard Management Update, Strategy & Leadership, and Innovation Excellence. He has appeared on PBS, Bloomberg, CBS News, and was a featured expert on the CNBC series The Business of Innovation, hosted by Maria Bartiromo. Details: www.innovationresource.com or contact (805) 682-1012.