With a change in the calendar in the offing, we dust off the crystal ball and proffer some trends for 2023.
One of the defining trends of the past few years has been tumult. Pure, unadulterated tumult that has upended norms and forced industries to pivot at a speed that they might not have previously thought possible. Now, barring anything wildly unexpected, we’re going to wager a guess and say that society and industry must look to the future with cautious optimism and a new mindset, rather than turning to the tried and trusted rules that might have held true pre-pandemic.
With that said, here are a few key areas for businesses and leaders to keep a close eye on as the new year looms large.
Continued Digital Transformation
Technological innovations have firmly taken root across industries, with many of them potentially dovetailing in the year to come, such as the advent of 5G networks, and its potential use cases across Artificial Intelligence (AI), Internet of Things (IoT), Virtual and Augmented Reality (VR/AR), and cloud computing.
According to a McKinsey survey, many respondents recognize that their companies’ business models are becoming obsolete. Only 11% believe their current business models will be economically viable through 2023, while another 64% say their companies need to build new digital businesses to help them get there. In the year ahead, we foresee top performers looking closely at strategically differentiating themselves by leveraging innovation to improve user experience and engagement, as opposed to using it to purely improve efficiencies. Coupled with this, leading organisations will attract tech-savvy executives and develop talent in-house rather than simply turning to the market for hiring.
Inflationary Concerns Persist
If you were to conduct a straw poll with CEOs and ask them about their biggest concerns in 2023, many would point to inflationary pressures and supply side constraints. Inflation is at record highs in many countries, above projections from December 2021 (as covered in this edition of the magazine, dear reader), and there are no signs that this will ease off in 2023. The unique mix of structural, cyclical, and supply chain issues contributing to inflation are here to stay, if only in the medium term. The solution to this needs to be more nuanced, with companies demonstrating greater resilience and agility in their strategy. Conventional wisdom and forecasting simply won’t pass muster. Black swan events, such as those we are currently mired in, call for factoring in bigger issues and developments than ever before. If you ask yourself the same old questions, you’ll get the same old answers. This new era calls for considering fresh angles and scenarios, some of them extreme, to stay ahead of the curve. And then, with this knowledge, hedge against the worst to maintain that edge. This might involve changing suppliers, switching to in-house teams, or something entirely different.
Putting Sustainability First
As climate change and the gravity of its challenge dawns on the world, sustainability and Environmental, Social, and Governance (ESG) issues are foremost in the mind of the C-suite. Sustainability is becoming an organisational imperative and priority, one seen by investors and consumers alike as a must-have rather than nice-to-have, and a factor that drives decisionmaking as well.
Historically, few companies have put in place the kind of formal structures that place sustainability at the core of the business. The legacy structures that treated ESG as a business issue generally centered around facets such as investor relations, PR, and corporate social responsibility. While this remains important, it does not cover the gamut of coverage needed for organisations to put sustainability first. Empowering personnel to engage with issues proactively and be accountable for outcomes is a first step to maximising stakeholder value on this front, with a broader plan laid out at an organisation wide level that puts in place clear goals, structures, and timeframes needed to succeed on the ESG front.
Managing the Great Resignation
It’s not just a figment of your imagination, it’s really happening. Talent pools were drained across companies and industries as the Great Resignation took hold in 2022. And with a whopping 86% of employees planning to resign in the next six months or so, according to recruitment agency Michael Page, this is not going away anytime soon.
If you think throwing money at the problem will solve it, think again. Michael Page’s findings further suggest that 61% of Indian employees are willing to accept a lower salary or forgo a pay rise and/ or a promotion for better work-life balance, overall well-being, and happiness. Companies are already giving double-digit salary hikes as the demand for skilled workers soared. And yet, despite this, the attrition rate still stands at 20.3% according to Aon, a figure that has gone up more than 7% within the last two years.
Table stakes demand that adequate compensation and benefits be on offer. But to win, organisations must recognize how the rules of engagement have irrevocably changed. Flexibility, inclusivity, a sense of community, and hybrid workplaces are just some of the additional factors employers need to win out.
Even so, the accelerated digital transformation we referenced earlier might see certain tasks or aspects of it become automated or passed off to AI and machines. This calls for new skills from employees, and for companies to actively upskill and reskill their workforce to take care of the intrinsically human elements of work that simply can’t be automated. Soft skills, such as creativity, critical thinking, communication skills, empathy, and leadership will gain increased importance in 2023.
The Changing Nature of CX
The customer has always been king, but if anything, the king (or queen) has become much more discerning over the past few years. They’ve become much more sophisticated and Customer Experience (CX) has become very important for businesses all around the world as consumers seek out differentiated experiences.
There is a business case to be made for doing so as well. McKinsey research suggests that improving CX increases sales revenues by 2-7% and profitability by 1-2% percent. And in addition to this, an improved experience boosts overall shareholder returns by 7-10% as well.
There are many ways that this can be brought to fruition, such as recommendation engines, virtual shopping assistants, streamlines after-sales support, and so much more.
And this needs to be seen from a futuristic lens, where the user experience is quantified in measurable terms using data, which is widely available. Broadly, this can be seen across customer data, demographic data, and financial data to understand the customer potential and if it is being fully catered to. And then, with these learnings, organisations can design great experiences that put people at the centre of the design experience. The metaverse is just the tip of this; the differentiator will be in how it’s leveraged to create immersive experiences that delight. This can also be turned inwards, to improve the employee experience, as the tussle for talent becomes more titanic than ever before.