8. Safety

- global to personal (rise of extremists like religious fundamentalists, terrorists, etc; personal safety in local communities; ability to provide basic needs like food, shelter, power, etc)
- technology impact
(invasion of privacy from the use of technology, eg social media, digitalisation, etc; the military use of drones rather than soldiers on the ground; use of safety cameras around buildings to identify and record threats, etc)
- volatile times
a) stability is no longer the norm (yet much of organisational development theory is based on stability, etc)
b) past success is no guarantee for future success
c) uncertain world with few definitive answers, ie many shades of grey
d) need to be flexible to handle many "unintended consequences" or "unplanned events"
e) change is a journey, not a destination, it is on-going
f) "business as usual" is less likely to be a sustainable option

(source: Stefan Hajkowicz, 2015)

Some other interesting trends include:

Spending habits are changing with people expecting a more personalised offering and value from their products while paying less; an emphasis on more ethical and environmentally-friendly consumerism. Some examples
- instead of buying instant coffee, people patronise a cafe that sells organic, fair-trade beans and promotes the story of its coffee growers. The cocoa and chocolate fair trade purchases in Australia increased from A $5.5 m. in 2009 to A $87 m. in 2010 (Fiona MacDonald, 2014)
- shopping holidays may be replaced with more intense experiences like volunteering; 1.6 m. volunteer tourists visit a year, with the worldwide industry worth A $2.6 b. (Fiona MacDonald, 2014)
Worldwide population
- it exceeds 7+ b. & is expected to reach 10 b. by 2050
- people in the developing countries are living and staying active longer, ie 22% of the world's population is expected to be 65 + by 2056. For example, in Australia by 2050, life expectancy at birth is expected to increase to around 90 years. Also, 2.7 people will be working to support every person aged over 65. On the other hand, many Australians, who are 65+, are willing and able to work into their 70s.
Global food production needs to increase by 70% to meet anticipated demand in 2050. This means the world needs to produce 470 m. tonnes extra meat annually (in 2013 we produced around 200 m million tonnes); we currently produce 2.1 b. tonnes for cereals, but would need to increase this production by 3 b. tonnes). On the other hand, we are losing 120,000 square km of farmland to degradation and over-cultivation annually.(Fiona MacDonald, 2014). We need to learn to live on less!!!!!!
Fossil fuels
Based on current global usage: we have 50+ years of oil reserves and 100+ years of coal reserves (Fiona MacDonald, 2014). Yet fossil fuels, like coal and oil, are under threat from nuclear and renewable energy like solar, wind, water, biogas, etc owing to fossil's pollution impact. on the environment
Economic growth
- more than 1b. people in Asia will move out of poverty and into the US$ 6,000 - 30,000 annual salary bracket over the next 10 years
- economies of developing countries in Asia are growing at around 8% annually
- by 2030 the bulk of global GDP will be generated from non-OECD countries
- Chinese growth (GDP) has almost tripled in the past 2 decades; between the early 1990s and 2000s, Chinese percentage of the global foreign exchange and gold reserves increased from 2.7 to 21.9.
- since the early 1990s, global trade marks held by Chinese residents have increased from around 6% to 32%
- in the 1980s, the geographic centre of the world's economy (calculated by measuring GNP across 70 locations) was located over Atlantic Ocean between Europe and the USA; it is predicted that by 2030 that the centre will lies somewhere between China and India. This change in focus will go beyond trade and require a better understanding of this region's peoples, cultures (including languages) and institutions.
"...in a changing world, if you stop moving too long, you'll sink; success lies in knowing which direction to steer..."
Fiona MacDonald, 2014
Flora and fauna
- only 1.5 m. of the Earth's estimated 5 million species have been formally described
- 1/3rd of all species could become extinct if climate change continues as predicted and 80% of all genetic diversity could be lost along with the species
- 70% of the world's plants are currently threatened with extinction
- 210 k. square km of land has been protected around the world since 2002

organisational development change management

In summary,

"...in a slower-paced world, even senior executives spent most of their time managing fairly stable ongoing operations. The personal characteristics that made for success reflected the bureaucratic organisational structures of the time - personal stability and reliability, being highly organized, following rules, supporting existing cultural values, being tough-minded and in a blokey world, often aggressively demanding conformity. Now the prime requirement is the ability to manage ongoing organisational change, incremental at times, but often transformational, and to create a culture that fosters innovation..."

Dexter Dunphy as quoted by Luke Slattery, 2007

Some changing paradigms

Globability - the world is flat, not round

Business - small fish eat the bigger ones

Demography - with time you become younger

Organisations - growth is not vertical but virtual

Product - fortune at the bottom pyramid (source: Nouzab Fareed, 2014)

People - commitment does not have time dimensions but value dimensions

- labour changes (low-skilled) over the years in USA

- in 1900, 40+% of workforce employed in agriculture; now around 2% (tractor, harvester, etc)

- in 1950s around 1/3 of Americans worked in manufacturing; now it is around 10% (assembly line, robots, etc)

- total retail workforce tripled (1940 to 2000) to be the largest source of jobs; now growing slower than general workforce, ie employing fewer people than in 1990 (digitalisation, internet, automation, etc)

Some examples of recent trends in the rules of running a business are explained by Betsy Morris (2006):

i) old rule (big dogs own the street); new rule (agile is best; being big can bite you)

Until the mid 1990s, a company's stock market value was linked with revenue. In 1993 Microsoft's market value exceeded IBM even though its revenue was 1/22 the size of IBM.

Size did not insulate GM from its troubles. The large pharmaceuticals that were valued for the amount of R & D have struggled; yet it is the smaller biotech companies, such as Genentech, that generate new drugs.

"'technological advances and changing business models have diminished the importance of scale, as outsourcing, partnering, and other alliances with specialty firms (with their economies of scale) have made it possible to convert fixed costs into variable ones..."

Betsy Morris, 2006

Dell is a good example: keeping its cost down by outsourcing disk drives, memory chips, monitors, etc frees it to focus on direct selling and just-in-time assembly.

ii) old rule (be No. 1 or No. 2 in your market); new rule (find a niche, create something new)

Market dominance is no guarantee for success. For example, Disney's dominance in animated films offered it little protection against Pixar's digital innovation; Coca-Cola's dominance has been threatened by bottled water, sports and energy drinks, etc which were initially viewed as low volume distractions. Only other hand, Starbucks has never desired to be No. 1 or 2 in the marketplace. It has continually chased niches, ie it has continually chased a product (coffee), etc.

Organisations need to keep moving, evolving and trying new things so that they become the company of choice.

iii) old rule (shareholders rule); new rule (a customer is king)

The old rule involved focusing on earnings per share in the short-term; this could encourage anti-customer behaviours, such as costing cutting. The rule focuses on consumers' details, such as new products, service calls, customer satisfaction scores, etc that all add to the bottom line but not necessarily in the short term.

iv) old rule (be lean and mean); to new rule (look out, not in)

Concentration on being lean and mean, such as via 6 Sigma, does not encourage exploring new ideas and/or different approaches. In other words, innovation suffers, ie

"...Nothing will kill it faster than trying to manage it, predict it, and put it on a time line..."

Vishva Dixit (vice president, research, Genentech) as quoted by Betsy Morris, 2006

Old rule encourages an inward-looking culture that can result in missing opportunities in the ever-changing business world of disruptive technologies, eg VOIP threatening to make phone calls virtually free.

To be successful, businesses have to focus on what is going on outside rather than just inside the organisation.

v) old rule (rank your players and go with the A's); new rule (hire passionate people)

The old rule ranked employees on performance as As, Bs and Cs; and then the Cs were culled, ie rank and yank. The new rule encourages employing people who are passionate about what they do, like Apple and Genentech

vi) old rule (hire a charismatic CEO); new rule (hire a courageous CEO)

The old rule encouraged celebrity CEOs who squeezed costs, deftly managing financial and accounting decisions, using acquisitions to grow but not necessarily providing long-term solutions. The new rule encourages organic growth and taking risks that can take a while to pay off.

vii) old rule (admire my might); new rule (admire my soul)

Previously, being large meant that you were powerful and encouraged a focus on now rather than the future. More recently, corporations have a social responsibility in addition to making money. This involves more than contributing to causes or being transparent; it involves being sustainable in the long term.

Growth (there are two sides to it)

Growth can give a competitive advantage in size, ie economies of scale like improved purchasing power owing to size, significant savings from centralised services, greater opportunity for staff development, etc. On the other hand, there are some dis-economies of management, such as increased organisational layers with management more divorced from customer and staff that can restrict communications and organisational flexibility, increased chance of silos developing within the organisation. As an organisation grows, it tends to become more bureaucratic and process-control orientated.

Generalization vs. specialisation

Traditionally, specialisation or substantial expertise has provided greater status, the potential for being indispensable and financial security. Recently, however, specialisation has come under threat from increasing technological changes, such as computer, automation, etc. Even the jobs of highly educated people have been challenged by technological change. For example, cardiac surgeons who make most of their income from open-heart surgery are under threat with the development of new heart valves that go in like stents. These are replacing the need for open-heart surgery.

Similarly, organisations that are preferring to hire people who can demonstrate a diversity of skills (generalists or all rounders) and will hire expertise as required.

Furthermore, demarcation between jobs is breaking down. For example, in the airline industry, flight attendants and pilots now help clean the planes, etc. Job flexibility is on the increase.

Collaborative revolution

"...Tremendous movement towards collaboration, driven by social media type technology...... and the preference of young people to work across a number of disciplines and jobs rather than become deep experts in any field..."

Kevin Wheeler as quoted by Fiona Smith, 2011

Linked with this is

- crowd sourcing, ie a network is created when organisations pay a fee to post problems to find solutions. For example, Eli Lilly uses retired scientists, obsessive hobbyists, university students and others to try to solve their problems in return for cash rewards

- slash workers, ie people simultaneously working on more than one career, eg lawyers playing in a band at night, graphic artists running a nightclub, accountants having their own craft business, etc

Based on this, it is expected that the people who will succeed have the following characteristics

"...- Can interpret complex and disparate information

- are willing to experiment with risky solutions

- can figure out things, even without expert knowledge

- are connected and live with inner dependencies

- are aware of global trends

- collaborate with a broad range of others..."

Kevin Wheeler as quoted by Fiona Smith, 2011c

An interesting example of a trend is the "citizens disaggregation" movement, ie consumers turning their backs on mass production. Some examples include
- citizen journalist blogging on current affairs, etc

- citizen scientists contributing to global science projects

- citizen manufacturing using 3-D printers to produce everything from spare parts to prosthetic limbs

- contamination scares of packaged, imported frozen foods is making people more food safety conscious and concerned about the world of mass produced food of uncertain origin. This is increasing the appeal of farmers' markets and community gardens.

The approach to work has changed as shown by the following table

Organisation

Hours/week

Weeks/year

Years

Total (K)

Comments

Traditional

47

47

47

104

Work for one organisation for all working life

Recent Past

37

37

37

56

Working less and retiring early

Now & Future

60

50

17

51

Working longer hours, more weeks & frequently changing jobs

The traditional pattern is like a marathon while the now and future is like a sprint that has little room for error.

Summary of the challenges facing organisations:

A natural agenda of issues is shaping the future, especially for corporations with global scope

Social divide: the ever-widening gap between those participating in the increasingly interdependent global economy and those not. For how much longer can 15% of the people get 85% of the benefits of globalisation?

Redefining growth: economic growth based on ever-increasing material use and discard is inconsistent with a finite world. How long can we keep piling up more junk in the same box?

Variety and inclusiveness: developing inclusiveness as a core competence in increasingly multi-cultural organisations. Who is the "we"

Attracting talented people and realising their potential: developing commitment in a world of free agents and volunteer talents. What are we committed to, really?

The role of the corporation: extending the traditional role of the corporation, especially the global corporation, to be more commensurate with its impact. Just how accountable will society expect us to be?

"...The system seeing itself: the challenges of coordination and coherence in social systems. How can we stop going faster while our ability to see further ahead is decreasing?..."

"Marblehead Letter" (2001) as quoted by Peter Senge et al, 2005

Ten Major Trends in Agriculture

1. Costs and risk aspects of climate change & impact of carbon tax

2. The cost & scarcity of water

3. The declining competitiveness of the Australian agri-food sector, eg it costs around 2.4 times to slaughter and process a cow in Australia c.f. USA

4. The shift in value along the supply chain

5. Corporatised farming and foreign ownership

6. Market access & biosecurity

7. Social values & accountability (largely driven by social media)

8. Growing global demand for food

9. Threats to the agriculture supply base

10. Technology

(source: Andrew Cornell, 2013b)

Competitive advantages

Based on USA data (work of David Yoffe as quoted by Martin Moore, 2008), something that gives a competitive advantage has limited time period. For example,

- price has less than 60 days

- advertising less than 12 months

- innovation less than 3 years

- manufacturing less than 3 years

- distribution less than 4 years

- human resources less than 7 years

Thus competitive advantage with people providing the best and price the least competitive advantage.

Some critical details that are required to run a successful business, ie

- location

- staff and management (motivated, stable and enthusiastic)

- low-cost structure

- good margins

- satisfying customers' needs and wants

- efficient management information systems and supply chains

- flexible approach

- learn from mistakes/failures

Timing and Luck

For any organisation to succeed, timing and luck are essential. Timing - customers are ready for your product/service; luck - your product/service is ready when the market wants it. For example, Virgin Mobile is the fastest growing company in history to reach a $1 billion turnover. Virgin Mobile was ready when the opportunity in the mobile market present itself. Furthermore, chance favours the prepared mind.

Luck plays an important role in everything we do. Thus we need to find ways to handle and manage it. This involves preparedness and creating a culture that can adapt to the unexpected. These things are always going to happen but what separates different managers is their response

 

 

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