3D Glasses

Fortune - telling business

Mon 27 Jan 2014

Author and futurist Richard Watson gazes into a murky future and considers where next for business.

Technological advances

Developing technologies like telepresence will allow more and more digital and virtual working and we may find this will grow faster because of energy costs, emissions and traffic gridlock.

However, while some businesses will do away with a physical presence, I do not see this spelling the end for physical offices. There will always be jobs that have to be done on location, like some kinds of manufacturing, and jobs which will benefit from face-to-face interaction, like health and education.

Places like schools aren’t just about learning, they are about socialisation, and there are social aspects to work too – people like being around other people, interacting, and I strongly believe innovation is social. With increased connectivity, there is an emerging issue with big data. There is too much information now and we must move from knowledge management to attention and retention management. There’s also an issue with how businesses manage employees’ access to information. With workers contactable 24/7, companies are discovering that having somebody permanently contactable isn’t very effective or good for people’s health.

We can also expect major changes with increasing machine capability, more automation, robotics and artificial intelligence. Technically we will need fewer people and we are perhaps 10 or 20 years away from major white-collar unemployment. We will have to make moral decisions about whether these technologies are adopted and what the people who are no longer required can do.

While only a fool would confidently predict even the near future in the current economic climate, it is also true that only a fool would not consider the direction of travel and try to plan accordingly.

The way we structure and conduct business has changed dramatically in the last 20 years and is certain to do so again in the coming decades.

Working Culture

There will be a real shift towards flexibility and personalisation in how people work. There is already a move in power from employer to employee due to demographics and people are more likely to dictate how and when they work. The idea that we work Monday to Friday, 9–5, is mad in a knowledge economy. People work best in bursts and I think we’ll see more work taking place outside of company walls with informal networks permeating outside.

We have witnessed a general modularisation of work and it’s going to fragment more. In the future there will be projects and people will pitch to work on them – more like a portfolio career. In many industries people will become freelance and project-based. This will be good for company profits but perhaps less good for job security.

The nature of leadership is changing too as we shift from a rigid, alpha-male structure model, which is quite military, to a much more open and fluid network, which is a bit more feminine – perhaps because there are more women in the workforce. Employers must think more about motivating people than giving orders. This depends on the economy though. In a boom, the power is with the employee. If it’s collapsing, it reverts to the employer.

A lot of people are beginning to question what a job is for and are rejecting that it’s just a question of making money. The ethical, social strategy of a company is important too and I see the John Lewis model of the cooperative as a future model.

The workplace environment is becoming increasingly stressful and employers need to think about how to manage employees’ stress. I think workplaces will become more touchy-feely, and motivating and incentivising your people will be critical.

Globalisation

Competition will grow and grow as globalisation continues. The key thing is that it will lead to more local, smart companies being set up, without the legacy costs of existing businesses. Africa is already interesting because it hasn’t invested in the infrastructure we have – in many cases they’re bypassing it. Chinese companies are building state-of-the-art factories from scratch meaning they don’t have to deal with the old factories or the liabilities of pensioners and can be a low-cost, more flexible operator.

To compete, UK companies will have to be the cheapest in the world or the best quality in the world or do something nobody else can do. Increasingly they are competing directly with people in Shanghai, and elsewhere working in manufacturing and now in knowledge work too. It’s about finding your niche and this will result in hyper-specialisation.

Outsourcing

The main reason businesses outsource is cost and that won’t go away, so outsourcing has a long way to run. But there may be political brakes on it, particularly sending work offshore. If things still aren’t looking good in the UK and Europe, there will be increasing pressure to bring back work. Another factor is that countries we are offshoring to, like China, are running out of labour and are looking to other contenders, such as Africa, to help fill the gap in the workforce.

Another reason to outsource is to allow a focus on what companies do best but businesses are going to have to be smart about where they draw the line. If you outsource areas like research and development, you risk being left with only a brand and that’s a pretty fragile situation to be in. But economies of scale and reliance on fast-moving specialist technologies will still encourage outsourcing of areas like administration.

We will continue to live in a globalised world in a virtual sense but whether it is physically globalised, I have my doubts. Aspects of that are already unravelling because of economic and resource protectionism and even localism. One of the results is physical deglobalisation – banks are a very good example of this. They are going back to their local boundaries.

Changing demographics

An ageing society combined with declining fertility will put immense pressure on health care and pensions and we will see major skill shortages in many different parts of the world. Employers will have to reorganise their businesses to appeal to 55-year-olds, instead of 25-year-olds, and one of the questions we don’t know the answer to is will people who are 65 want to continue working in 10 or 20 years’ time? To attract them we will have to redesign offices and manufacturing places and we will have to reconsider pay, flexibility and conditions. That simple demographic will change business quite significantly.

Currently Europe is in the worst position but China is ageing very, very fast. Young people drive the economy and innovation, and pockets of southeast Asia and sub-Saharan Africa have the highest fertility rates. This could really turn the tables, and in 2030, we could be in the ironic situation where Africa is feeding Europe rather than the other way around.