The rate of new business formation exploded during the pandemic. Entrepreneurs responded to the immense opportunities they saw as the economy underwent a seismic shift. Recently, the World Bank announced that we are entering a period of 1970s-style stagflation, with stagnant growth and high inflation. Those who know their business history know that many great companies have emerged from economic crises. There is no doubt that as the economy undergoes another seismic shift, entrepreneurs will be looking to set up new businesses, and those already in business will be looking to transform theirs to meet the opportunities ahead. Here are six key trends that will shape the future of business.
The rise of millennials
Millennials have become the largest living generation in the United States. Companies that want to be important players in tomorrow’s economic landscape, have to win with millennials. According to a report by McKinsey & Company, millennials spend $1 trillion a year and are set to boast an income of $8.3 trillion by 2025, compared to $6.4 trillion for Gen Xers and $1.1 trillion for Baby Boomers.
Businesses have to adjust to millennial tastes, habits and values if they are to succeed. They also need to tailor their strategies around winning the right millennial segment for their business.
Winning millennials is not just about creating and keeping customers, it’s also about hiring millennial employees. So social media platforms, schools and training must be used, not just to create and keep customers, but to attract millennial talent.
A more demanding labor pool
The population is growing at a slower and slower rate, and with the retirement of Baby Boomers, the labor pool is going to get smaller. The impact of a shrinking labor pool is shifting more power to workers. We have already seen firms treat remote work as the new signing bonus. The Great Resignation shrank the labor pool even more, as workers decided to start their own businesses. Companies are under immense pressure to adjust their compensation, work hours and work models to remain attractive to workers.
We see companies wrestling with how to integrate remote and hybrid work models into their businesses. Not every company can go remote or hybrid. However, the success of companies such as Dropbox, Twitter and Slack shows that it is possible to build a large and successful firm with remote workers. Where they can, workers will choose companies that offer this. This is even more important as people migrate away from cities in search of better, lower-cost living conditions.
The Great Resignation also showed that many workers felt they were being underpaid. This has put pressure on businesses to offer better compensation packages. However, better compensation is not the only form of compensation people seek: Workers want a better work-life balance.
A more diverse population
Millennials are the most diverse demographic in the U.S., both because of immigration and the growth of minority populations.
Businesses will have to learn the cultural languages of the communities it seeks to target. Research by Erin Meyer shows the gains that a company can make by investing capital in understanding how to navigate the cultural minefield. A failure to understand where your employees and target communities sit on a cultural map can lead to a failure to manage effectively, or a failure to effectively create and keep a customer, or attract employees.
Being able to communicate across cultures is an increasingly important tool for managers. Companies like Netflix have invested heavily in training their managers and staff according to culture maps to be more effective.
The rise of platforms
Platforms are online marketplaces that match consumers with suppliers. Think Airbnb, Uber and Amazon. Today’s great businesses are mediated by the internet and match demand and supply in very similar ways.
Software has eaten virtually every kind of business in the world. If your business is to succeed in this new era, it too must be mediated through the internet and software. It goes beyond having an online presence — at this rate, not having an online presence is anomalous — improving search engine optimization (SEO), or even becoming a company that measures and tries to improve everything. You have to reimagine your business and disrupt it to keep up.
AI is eating the world
Not only has software been eating the world for over a decade, but artificial intelligence has also started to eat the world, disrupting countless businesses. You may not realize it, but you are constantly in contact with some form of AI. Any task that can be automated should be, and AI is how.
To set your business on the path of automation, you first have to understand the processes that drive the business and determine which aspects are open to automisation. By mapping and analyzing your processes, you can then find the technologies you need to transform your business.
It’s important to engage your employees, because they have an intimate understanding of the tasks that can be automated. If you don’t engage with them, they may not find your solutions useful, making the whole process a mistake.
The emergence of big data
Data is today’s oil. This is a function of the importance of the internet and software. The internet naturally collects and propagates data. Businesses that can successfully unearth actionable insights from the volumes of data their systems naturally create can derive enormous value from that data, particularly in predicting future business trends.
Data can help your business understand your customers better, personalize offerings to those clients and become more efficient. No business can succeed without some kind of policy to maximize the use of its data.