OVERVIEW:  2010 THE REAL 'MAKE OR BREAK' ISSUES AND TRENDS

ISSUE #1: GOODBYE GLOBALIZATION, HELLO LOCALISATION

Before the downturn, most of us assumed that globalization was an unstoppable force and would, in turn, bring wealth and security to all. Well at best, these dreams look highly questionable.  The sovereign debt issue that surfaced in Greece now threatens to divide the economies of Europe into the Great Recession's winners and losers.  Rather than reinforcing globalization, it looks as if the real outcome the the Great Recession is to produce an economically divided world - most notably in the form of a "two tier" grouping of the developed economies.  And within each developed economy, there is increasing evidence of bifurcation, or the emergence of a series of localised economies, some of which have fared quite well, others that are still reeling from the effects of earlier recessions.  To illustrate the need to think locally, look at this inter-active map of the UK to see those local economies that are recovering and those that are still struggling.  In terms of strategy-making, localization must be the keyword.  Think, for business planning, of a world in three 'blocs':

Bloc #1:  The survivors of the developed world

Bloc #2:  The emerging economies (Notably the BRIC and IBSA - India, Brazil, South Africa forums)

Bloc #3:  The losers of the developed world.

There is more in this post about this issue.

TREND:  INCREASING.

ISSUE #2: THE LOW GROWTH DECADE

Many observers are now pointing to a new low growth era.   Some propose that the developed economies (including the survivors), will struggle to exceed 2% average GDP over the coming 40 years[1].  In this study, even China fails to reach an average growth rate of 6% per  annum.  This trend holds substantial implications for businesses that range from how we define "success" (in the future, "success" equals earnings stability not continuous year on year earnings growth) to how we manage and direct our salesforces (retention becomes more important than acquisition).

TREND:  INCREASING  Read more here.

ISSUE #3: CHANGE COMES IN PHASES

This is more a state of awareness for business leaders than a true trend.  My proposition is that the true effects of the Great Recession, in terms of the impact upon our markets, distribution routes and, most importantly, customers will not be felt until the recession is declared over by the economists.  The end of the recession is the just the beginning for strategists.  Now is the time to get out and find out how customers needs are changing. In all, your business could face up to four waves of change in your customer communities as we progress out of recession and into recovery.

TREND:  This issue is INCREASING in importance for strategists as customers face the reality of a slow recovery.   Read more here.

ISSUE #4: VALUISM

A long, slow and uncertain economic recovery, particularly within bloc #3, those developed countries that have emerged as the losers in the Great Recession (notably Greece, Spain and Portugal), will create a vacuum.  Consumerism, materialism and the "have it now, pay for it later" era has come to an end.  For many, free market capitalism will only have delivered debt.  So if consumerism was the hallmark of the developed economies - what will replace it?  Sometimes it is helpful in times of change to think of an opposing extreme and the direct opposite of materialism is valuism, or the importance of moral codes of behaviour.  Perhaps Adam Smith had a glimpse of this writing some 200 years ago when he referred to the solid virtues of “prudence, restraint, industry, frugality, sobriety, honesty, civility, and reliability”[2]. "Making more from less" could be one of the new by-words. More about valuism can be found here.

A NEW KEY trend especially in bloc #3.  This trend was developed from the themes in From Consumerism to Repletion.

ISSUE #5: NEW POLITICS

Research published here in the UK in Q1 2010 points to increasing voter ambivalence. New political landscapes are appearing (Hungary, for example).  The same vacuum described in Issue #4: Valuism could stimulate major change in some developed economies - especially bloc #3.  Expect to see a period of short-lived governments with new value-based parties appearing exerting influence beyond their size.

A KEY NEW TREND.  Read more about this here.

ISSUE #6: SECURITY

In an increasingly uncertain world, security is the new key-word both for corporations wishing to protect knowledge and value chains to consumers wishing to protect their nearest and dearest.  Just three years ago the annual WEF Davos summit was full of talk of "blue skies ahead".  Now the talk is of economic uncertainty, energy supply supply crises and natural resource shortages.

A KEY NEW TREND.

ISSUE #7: BIG BROTHER, MY FRIEND

Or in other words, a distrust of large corporations.  This is already an emerging issue, that I first picked up in July 2009, when I looked at research focusing upon Generation X (the offspring of the 'baby boomers') in the US.  Whilst an emerging distrust of business is probably prevalent throughout the developed world, there are distinctions or regional differences.  There is evidence (US-based) that consumers now trust government more than big corporations to take care of them.  So the "Big brother, my friend" observation probably applies to bloc #1 countries.  But it certainly does not apply, yet, to the losers of the developed world in bloc #3.  Here there is an emerging vacuum yet to be filled.

TREND:  STABLE unchanged from January 2010.

ISSUE #8: CSR – A NEW GENERIC STRATEGY?

There is now emerging evidence that corporate social responsibility (CSR) could become a new differentiator. This fits in well with a trend to Valuism.  Traditionally, we may have viewed CSR as just a corporate level issue. But if we reflect upon the findings briefly summarised under issue #4, there is a strong indication that we should consider CSR at the product and customer segment levels.

So, could CSR be as important a differentiator as cost was in the past decade?

TREND:  INCREASING

ISSUE #9: INNOVATE OR DIE

I've corrupted a title from one of Tom Peters' articles written a couple of decades ago.  The upside to recessions is that they bring in their wake a wave of creative destruction that requires, in turn, a wave of innovation. During the period 1929-1930 in the US 15,000 banks went to the wall, GDP fell by 46% and unemployment rose to 25%.  But in the following 24 months the magazine Fortune was launched, Motorola introduced the first car radio and the cosmetics brand Revlon first appeared.

Everything about the latest recession demands innovation - from a massive shift in consumer behaviour through to the need for many developed economies to move away from a dependency upon the services sector.

The issue is that the type of innovation that largely got us through the last two decades - process innovation and the focus on cost reduction - won't get organizations through the challenges, and more importantly, opportunities of the coming decade.

TREND:  INCREASING.  Formerly labelled The Fruits of Creative Destruction.

ISSUE #10: STRESS

Don't forget your employees in all of this.  A long and uncertain recovery will mean continued above normal stress levels.

At the very least train managers and team leaders to spot the symptoms.

TREND: UNCHANGED