No-one would argue with the sentiment that the world of business has changed dramatically in the past 10 years. Markets, competitors and the means of supply are increasingly complex and technologically driven, and become more so every day. It's imperative that business leaders understand what the future might hold so that they can prepare for the challenges they may face.
Presumably, you can outline your business marketplace today in some detail. But how will it look 10 years from now? By understanding the past, analysing trends and using the information gleaned, leaders can start anticipating the future. Indeed, we must actively take steps to shape what we desire for our organisations.
At the Higher Education Funding Council for England, of which I am chairman, we're working to develop a 10- to 15-year framework to ensure that the UK's higher education system remains world-class. Employer engagement is a priority for the HE sector. Employers can benefit hugely from closer partnership with HE, especially in terms of knowledge transfer and innovation and the development of the skills base that the UK needs to stay competitive.
Two fundamental questions face business leaders. What will the world of work look like in a decade's time? And what needs to happen now so that businesses are ready for the challenges? These questions were addressed by a recent study from the Chartered Management Institute, Management Futures: The world of work in 2018. It identifies 16 scenarios facing UK organisations, exploring the forces on the horizon that will shape our business environment.
A logical starting point for this discussion is the economy. The UK's economy is increasingly knowledge-based, with a growing share of GDP flowing from knowledge intangibles, and an increasing proportion of our trade being in high value added services: exports of financial services, computer services, and royalty and licence fees grew by more than 100% in real terms between 1995 and 2005. But we face increasing global competition, and staying competitive requires Britain to remain flexible and open to the opportunities offered by globalisation.
A major finding of the study is that business models are likely to change, becoming more open to the outside world. Organisations need to create models that not only exceed customer expectations but anticipate and provoke them. The organisation of the future will involve customers in the value chain, treating them as equals to improve products and services before they go to market. The customer will indeed be king. More than 1,000 senior managers were surveyed as part of the study and 63% said customer participation in business decisions would increase.
Technology is likely to be another area of change. To appreciate the potential scale, consider how the internet has transformed the business landscape over the past decade. But the report finds that despite the massive increase in electronic commerce, the UK should be doing much more to exploit the commercial opportunities of information and communication technologies. Just look at the large disparity in the use of technology by senior managers and professionals compared to low-skilled workers. There's still enormous potential for change.
Equally challenging will be the task of managing the UK's increasingly diverse workforce. Britain is experiencing unprecedented social change brought about by demographic shifts, immigration and higher employment mobility. We are seeing the emergence of a multi-generational workforce, and companies need to plan their human resource strategies accordingly.
A combination of these factors will mean that more organisations are largely, or even wholly, virtual. Are we about to see a return to the cottage industry mentality of the mid-19th century? With demographic changes, a determination to reduce travel, and the possibilities opened up by technology, many individuals will work in a virtual office environment in the comfort of their own home. Leading and inspiring teams on this basis will require new managerial skills.
A consistent insight to emerge from the study is that although we cannot determine the future, we can prepare for it. Successful future organisations will do more than just embrace change: they will identify, anticipate and drive change. The study offers a framework to prompt the right questions and start the process of ensuring that your organisation is future-proofed.
These economic, technological, social and political influences could create huge changes in the UK over the next decade. Preparing to meet them will not be easy; no single strategy will ensure that organisations are ready for the future. But by thinking carefully about what might happen, leaders and managers have a better chance of making sure their organisations and teams are effective, capable and competitive.
CV: Tim Melville-Ross is chairman of DTZ Holdings, Manganese Bronze Holdings, Royal London Mutual Insurance Society and the Higher Education Funding Council for England (HEFCE). He was director general of the Institute of Directors 1994-99 and formerly chief executive of the Nationwide Building Society. Melville-Ross was president of the Chartered Management Institute in 2006-07. He was awarded the CBE in 2005 for services to workplace learning and development.
- To download the Management Futures study, the accompanying environmental scanning report and a podcast exploring the future world of work, visit www.managers.org.uk/future.