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At this time of the year, people tend to reflect, take stock and try to prepare for what is to come in the New Year. 2018 has been a turbulent year and there are clear indications we may be moving into the next recession. The federal reserve has been cautiously hiking interest rates; however, the market isn’t buying it, which has led to a so-called yield curve flip – long term interest rates being lower than short term rates. This suggests that the market expects the federal reserve to reverse its policy in the near future, in response to the economy deteriorating. In the past, yield curve flips have been an early indicator for recessions. At the same time, earnings growth has generally slowed and further indicators can be found in business climate indices.
Political uncertainty is often a big factor. Currently, the isolationist trend is growing in popularity – not only in the US – and is challenging the previous consensus toward globalisation. Seldom have companies been so much at the centre of politics; German car makers have been meeting directly with US administration in a bid to increase their investments in the States, Facebook has twice been scrutinized over its handling of personal data – making it available to preferred customers, and an executive from Huawei is being charged with breaching the trade embargo on Iran. All these headlines are within the last week! In times as volatile as this, companies need to focus on stability, consolidation and agility. Short-term optimisation of profit margins is most probably a recipe for disaster in these precarious times. From a business viewpoint, organisations must be prudent about potential outcomes, and try not get taken by surprise by planning different scenarios.
Technology moves at an incredible pace, with the availability of data at the highest it’s ever been. Now that the bitcoin hype has subsided, blockchain will have to prove its true benefits in do-or-die fashion in the coming year – for example, driving change in end-to-end supply chain. Internet of Things, internet of machines, Supply Chain 4.0, digital printing and nano-technology are all areas, which most businesses need to address. And, the job landscape is radically changing, with ever-increasing automation replacing humans with machines in a move which could be likened to a ‘Fourth Industrial Revolution’. This is creating the need for people to develop a new set of skills – my daughter is about to finish school and the choice for studies is far more complex and specific than it was, whilst at the same time exciting, as opportunities grow.
Entertainment has been redefined; although I’m writing a blog, vlogs – a video blog for the uninitiated – have been on the rise in the last couple of years as a form of media communication. The publishing industry is massively impacted by technology, as well as social media. Mobile applications are redefining the service industry, with consumers able to order food and drink, and book entertainment at the tap of a touchscreen. Indeed, smartphones are becoming the centre of the consumer lifestyle, facilitating banking and mobile payments which are at their next tipping point, with innovations such as ApplePay and AndroidPay.
You need to ask yourself is whether your business is mature enough to take on these challenges in a true end-to-end approach? If not, get ready to drive collaborative team work, break down functional barriers and start the change journey to face future uncertainties in a timely and proactive manner, instead of focusing on the short term.