The next global driver of change

It is change that is shaping industrial forces. The forces that are influencing the strategic decisions of various organizations today are fallout of global drivers of change that have impacted the businesses and governments in the past decade and a half. These global drivers of change have been explained in great clarity by business leaders and management gurus alike. The changes in the past decade and a half were driven by liberalization of economies world over and innovations in information and communication technologies. Other major drivers of change such as competition and customer preferences have been a direct result of globalization and technological innovations.

Understanding globalization and technological innovations

Globalization is defined as a process of economic liberalization through removal of barriers to the trade by various countries and lateral diffusion of knowledge and information across the businesses. With the gradual lifting of trade barriers in the developing countries, globalization provided an opportunity for businesses constrained by domestic market size. And as foreign investments have been welcomed by these countries, globalization becomes synonym of “produce where it is cheapest to produce and sell where demand is greatest”.

The above phenomenon is taking the competition to different heights where there is little scope for survival of inefficient firms. Competitiveness in terms of market shares and profitability to achieve a dominant position in the growing market place has made it obvious for many a firm to reinvent them. The same reasons push companies having complementary strengths to merge together and there by increasing market share, reach and size with far less capital and with out actually increasing the volumes of total supplies in the industry, which actually tilts the bargaining power towards the supplier of goods and services.

So what made the globalization possible – constrained profits and markets and thus limited economic development of countries had left no options for the political leadership but to open the trade and economic gates. The result can be seen from the fact that world economy has grown by over 52% during the decade so far with a clear shift in trade, production and consumption towards the developing countries.

Information and communication technologies were adopted by the companies to improve the efficiencies of manufacturing and transactions and with the advent of internet technology, the IT assumed the importance at global scale. Internet facilitated information flow for integration of businesses of a corporate across the globe. Advancements in ICT are complementing the business needs in increasingly global economy and more and more business models are evolving on these advancements to conduct business in an efficient and effective way. Moreover, here are companies who have developed competitive advantage around the way they deploy IT systems. There is a realization in the industry that innovativeness of a firm in deployment of IT systems enhances the bottom line and customer satisfaction levels.

Next driver of change

These two drivers of globalization and advancement in ICT continue to drive change across national boundaries and industries, but early warnings of arrival of a bigger driver of change on the horizon are already ringing. This driver of change may have a scale of impact which would be much higher than other drivers of change that the businesses and governments had seen in the past. If ICT determines the operational efficiency of a firm, globalization has impacted the efficiency of governments in putting conducive environment in place for businesses to thrive, where competition ensures survival of the fittest. The next driver of change that we are going to introduce will have impact on the very survival of the planet. The change has got to do with climate change. Today as individuals we may differ in our opinion of significance and timescale before the climate change really manifests itself on the earth in clearly perceptible ways for all of us to come to a common point of view. But it would be too late for political and business houses to react. The scope and scale of impact of these global drivers of change are brought out below:

As can be seen if the developments in Information and communication technology have been deployed by the companies in improving operation efficiencies, economic liberalization and removal of trade barriers helped in improved competitiveness, size and market shares of the companies with an overall impact on the economies of the region. The next driver of change - climate change - has the potential of driving companies towards sustainability with an overall impact on the eco system of the planet.

Business for global wellbeing

On the flip side, this next driver of change has the potential to drive us towards “business for global wellbeing”. Climate change along with disparity in quality of life in the society where business is operating are no longer just a matter of corporate social responsibility, they in fact provide businesses with a wonderful opportunity to align business interests with social cause. With global competition for resources and markets and galore of opportunities in developing and under developed countries, the clinching factor for any international company to start and succeed in business in these areas is certainly the company’s track record of community concern and development. Some of the companies have already realized the cost of carbon emissions, thanks to ever increasingly stringent norms and penalties and carbon trading as a fall out of Kyoto Protocol.

For many a firm, the business case for emission control lies in the gains in resulting operating efficiencies in terms of fuel consumption, material consumption and so on. And there are industries where the relation between emissions and strategic gains is becoming clearer and number of such industries and companies is growing by the day. Emission effectiveness is driving their quest for new products and services.

How effectively business leaders can sustain emphasis on this next driver of change and tap creative potential of people to develop technologies, business models and above all passion for inclusive development of societies will determine, not only the future of their own companies but also our planet.

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