“Time and tide wait for no man.” These famous words from Geoffery Chaucer ring true now more than ever. To say our world is moving at a fast pace is a massive understatement, especially as we enter the next economic era, in which the challenges businesses face are neither temporary nor readily reversible.
Many of the world’s top economists and financial analysts agree that time has everything to do with the current climate, including Mohamed El-Erian, chief economic advisor at Allianz and president of Queens College Cambridge, who recently wrote that “rather than one more turn of the economic wheel, the world may be experiencing major structural and secular changes that will outlast the current business cycle.”
While time itself remains the same—in other words, a month is still a month—the sheer volume of change taking place within those 30-odd days is growing. To use this time effectively, you’ve got to foster a mindset and build a team that can operate, anticipate, forecast, and adapt the way they work accordingly.
You may think your organization has sufficient time to adjust, but in reality, you should already be working on your responses to these changes. As part of Navigate’s series on the next economy, we’ll dive deeper into the market conditions that got us here, how your business can elude the “luxury of time” fallacy, and what it takes not only to survive but thrive amidst the chaos.
The rise of exponential technologies
Let’s get technical for a moment and consider Moore’s Law. This prediction, made by the late Gordon Moore, the co-founder of Intel, states that the number of transistors on a microchip will double approximately every two years, while the cost per transistor will decrease. As far as predictions go, this one’s proven to be remarkably accurate and has driven exponential growth in computing power, leading to the development of smaller, faster, and more powerful devices.
This has revolutionized industries and paved the way for new technologies such as artificial intelligence (AI), machine learning (ML), biotechnology, green and renewable energy, blockchain, cryptocurrency, and the metaverse. Recent newsworthy advances in AI—namely ChatGPT, Bard, and Ernie Bot—will introduce further untapped value and subsequent consequences to organizations.
As a result of this growth—and the fact that organizations are already beginning to make decisions that plot them on the exponential growth curve—organizations that stick to the status quo will likely lose their market share and competitive edge over time. More often than not, companies underestimate a given technology’s impact on its business until it’s too late, leading many to lag behind if they had not already invested and adopted. Because it is so difficult to predict the pace of progress, it’s crucial that organizations dedicate budget and resources now to experimenting with new tools, technologies, and systems to mitigate the risk of falling behind the curve.
The ever-changing nature of work
And now for the inevitable “but.” Despite the wave of AI, ML, and other next-generation tech, people—not digital solutions—need to be at the center of every executive team and business decision, both from a buyer perspective (e.g., changing patterns of consumption, decision criteria) and an employee perspective (e.g., upskilling, working in different ways).
While AI and other tech can yield incredible benefits to automation, efficiency, and cost reduction, there is the inherent assumption that AI can (and will) replace much of the workforce, leading to further layoffs and downsizing. Though this may be true for certain roles and processes, businesses should begin assessing their long-term goals, where these tools fit in (along with their limitations), and how to repurpose roles and reskill the human workforce to complement the capabilities AI can bring to the table.
AI isn’t the only force shaping the future of work. Wage growth has continued to accelerate, but labor force participation has declined. The departing workforce is not being replaced at a steady pace and we continue to see that wages and salary alone carry less weight in incentivizing job growth. The combination of these factors is powerful—and requires a change in mindset for employers.
Today’s post-pandemic workforce has shown that work-life balance and values-driven opportunities matter more than they have in previous times. For many current and prospective employees—particularly those newer to the workforce—Environmental, Social, and Governance (ESG) matters, corporate purpose, and workplace culture matter more than ever. From a more dedicated stance on climate change and clean and renewable energy to swift, meaningful responses to emergent social issues, employees and consumers alike seek greater corporate accountability.
The combination of the generational exit from the workforce, advancements in technology, widespread layoffs, and the Great Resignation has resulted in a discrepancy between skills needed versus skills available in the market. The result: a widening gap in what organizations need long-term, which has the potential to be a lasting issue rather than a minor setback.
Getting time back on your side
In eras past, organizations had the luxury of time—or at least they operated as if they did. Many businesses continue to waste resources and operate inefficiently, believing they can always make up for losses in the future. Until now, the slow speed of marketplace evolution has allowed wasteful habits to continue without consequence. This era, however, is ending.
You can’t guess or predict your way through this change, you have to act through it. The opportunities that increased computing power and technological capabilities overlayed with industry-specific applications will spur increased innovation and digital strategy spend, and executives will need to keep up with exponential disruption to remain leaders in their space. They must do this without losing sight of their people, as the team is the one true competitive advantage that can’t be bought or copied; it has to be built. If this all sounds daunting, it is—but we’re here to help. Stay tuned as we continue unpacking the realities of the next economic era and what they mean for your business. In the meantime, don’t hesitate to reach out; we welcome the opportunity to keep the conversation going.