Influencers of many kinds gathered for the World Economic Forum in Davos again recently to discuss the problems our world faces. More than ever, they looked to business to come up with solutions – and that’s not only because several world leaders dropped out of the event this year.
New Edelman research shows three quarters of people trust their employer but less than half have faith in their government. What’s more, 73 percent think a company can ‘increase profits while improving the economic and social conditions in the communities where it operates’. In case you were wondering, that’s up 9 percentage points from a year ago.
I find this both inspiring and a little daunting too.
With rising stakeholder expectations, no business can afford to fall behind. Today’s leaders must think about future proofing their business and they must also demonstrate a positive contribution to humanity.
So here are five suggestions to help you and your business balance profit with purpose:
1. Invest in people
The OECD estimates that 65 percent of today’s children will go into jobs which don’t yet exist. Advances in robotics and artificial intelligence are already creating opportunities for those with the right expertise and aptitude to seize them, but others fear being left behind. Alongside governments, businesses have a responsibility to equip their employees with the skills they need to stay ahead of technological change. Investing in training for both soft and technical skills, re-thinking ways of
working and proactively building a talent pipeline are some of the things management teams should do to ensure their company, and their workforce, stays competitive in the decades ahead.
2. Keep pace with technology
Technology is transforming where and how consumers buy goods and services and how they interact with brands and with each other. Online sales in the UK have doubled in just five years, banks are using machine learning to better understand customer needs, and manufacturers are using smart data to adapt their production lines. Keeping up with the latest innovations, thinking about future trends and creating a structure and culture agile enough to capitalise on change is critical for businesses to survive the digital transition.
3. Look to Asia
By 2050, billions of consumers will join the middle classes, particularly in Asia. The region is already home to 28.5 percent of the world's 2,754 billionaires – more than North America. The rebalancing of global wealth towards Asia is opening up new markets for internationally minded businesses to tap. This starts with researching the opportunity for your specific product or service, possibly adapting it to local preferences, then harnessing the power of digital tools to reach these increasingly tech-savvy customers. Over the coming decade, roughly 70 percent of global growth will come from countries we currently describe as emerging markets.
4. Decarbonise your operations
A recent HSBC survey showed that one in three businesses is planning to make its supply chains more sustainable. No matter their size, companies can reduce their environmental footprint and play an active part in mitigating the risks associated with climate change. The good news is that going green can also make your business more competitive. Companies that can demonstrate high sustainability credentials can attract the growing number of consumers who want to buy ‘green’. One common
action is to try to source closer to home, cutting related travel emissions and costs. Leaders who want to transition their business to be more sustainable can look at who they buy from, and where, and can invest in renewable sources of energy.
5. Understand your purpose
Purpose means more than delivering the right products and services to customers, it’s also about doing right by the community. Public and shareholder expectations have never been higher, so companies must demonstrate a positive impact on economic and social conditions. Some companies are leading by example. Unilever, for instance, has developed a Sustainable Living Plan which tracks progress towards reducing their environmental footprint while increasing their positive social impact. It’s important for leaders to understand the societal impact of their business and to implement a measurable and transparent ESG strategy to improve it. In this approach, the UN sustainable development goals can provide a useful roadmap.
Changing your business model to meet new expectations and to grasp new opportunities requires strong leadership, investment and vision. In a fast-changing environment, leaders who can demonstrate agility and responsibility will be best placed to secure long-term success.
This may seem easier for large companies with dedicated strategy teams than for small business owners, but future proofing your business is always important, whatever your size. Good luck!