LSE Lecture: The company of 2020

My housemates and I were just thinking about this...our lives are quite interesting...lots of events, museums, etc available in London...all you need to do is take advantage.
So as a part of my ''explore London'' programme, as I realised I may not be here long, I started by going to the very cool Natural History Museum yesterday and to a London School of Economics lecture today.

This lecture was held by a managing partner of McKinsey in UK and Ireland. So if you're interested in what he thinks will be the characteristics of the global companies in 2020 read on...

He first started by looking at trends of the past 20 years, like:
- population growth of 34%, therefore markets grew
- growth in GDP, trade and capital flows
- increase in complexity and efficiency of financial services
- the growth of BRIC markets: Brazil, Russia, India, China
In this context, global companies made sense, to lower costs and to access better human resources. Asnd some did well, increasing their revenue by 50% and their income by 150%, and some others fell under the pressure.

So what does the near future hold for global companies?
He identified 5 opportunities and 5 challenges. The 5 opportunities are:

1. Manage your portfolio effectively.
Centers of power ares shifting (see places like Dubai, growing at an incredible rate), companies having to adapt to markets in developing countries which are diiferent from the developed countries, consumers will double in number in the next decade, demographics and distribution channels are different, etc.
Interesting facts: even if emerging markets are growing, by 2015 the developed markets will still be spending 16 times more than the developed ones. Also, 60% of the Spanish population in the US will have more buying power by 2015 than the whole Chinese population.
Therefore, one opportunity for companies in the future is balancing the developing and developed markets.

2. Capitalise on the technological revolution.
Facebook got 60 mil. people on in the past 6 years and the truth is that technological connectivity is changing our businesses from a monologue to a dialogue.
True value will come from comibing technology with new ways of doing business.

3. Understand and anticipate better the risks of resouce scarcity. The world is shifting to a low-carbon economy, where regulation is tighter, where carbon markets will grow to the size of today's oil markets and where investment in renewable energy will grow.

4. Shaping an effective social agenda- paying more attention to socio-political and grass roots movements. So companies will need to evaluate the risk of trends, try to turn them into opportunities, build relationships, worry about brands and reutations and about regulation.

5. Engaging with governments- there is a lot to gain from public-private partnerships, as there are higher expectations from the public sector to create wealth and to deliver more public services.

The 5 implications from the above challenges are:

1. Continuing the economic imperative to make money. How? through capital assessment of risk and reward opportunities. Nothing new.

2. Using complexity to their own competitive advantage (both individual and organisational)- rather than trying to simplify things.
If a company can manage a complex structure well, then this will increase its ability to adapt and:
- will give it more knowledge and insights , by connecting more dots
- will give it a bigger robustness of decision (because it can be made with contribution of more people)
- and if managed well, this will confuse the competitors.

3. Making transformation change happen- by a simple model of understanding the context, establishing where we want to go, provide leadership, strategy and processes. The company of the future, like today, will need inspirational leadership, special indivisuals that work accross culture and that borrow a lot from politicians' way: stories, key messages, a bit of crying from time to time, etc.

4. Developing global labour and talent strategy- there will be more volatility of global HR supply and demand. Most likely smaller global companies will attract more good people and will produce more value per employee (see GM vs Google).

5. Building competitive advantage through knowledge management- we create information faster, but the challenge is to manage and organise this info, make knowledge networks thrive and take things from India and apply them to Toronto.

From the Q&A session, the most interesting things mentioned were:
- What skills do employees need in the future?
More maths and statistics knowledge! to base their decisions on
and more adaptability- most likely people staying in the same business will have to go through more departments. Set careers do not work anymore.
- What new technologies will influence the future?
- biological development, the new revolution will be in healthcare
- climate products and energy efficiency
- continued application of math and statistical techniques to management- a change in business
An interesting remarque was that CSR will no longer exist as a concept of its own- there will be no more normal agenda and CSR agenda, but they will intertwine. And that is because the business, the society and especially the employees demand it.