December 5, 2007

Everything You Need to Get on Track and Stay That Way

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Are You Paying Attention?
No one has a crystal ball into the future, but certain trends appear to be in the making and are worth considering now. Although it’s sometimes difficult to know how environmental forces are going to impact your business, they really do matter. Like the weather – you are subconsciously aware of the force, but it’s not until a big storm comes that you really pay attention. The important part, like everything in strategic planning, is to figure out which trends matter to your business. Huge successes can come from being aware of environmental forces.

Cultural and societal shifts are probably the hardest to spot because they are the result of tiny changes in a society’s general attitudes, preferences, tastes, and beliefs. Catching, or even better – predicting, a social trend can be a home run for your business. Consider the reinvention of coffee as a lifestyle, the shift to digital music, and outsourcing your IT department.

Research by McKinsey & Company, advisors and counselors to more than 70 percent of Fortune magazine’s most admired list of companies, shows that chief executives have increasingly incorporated environmental, social, and governance issues into core strategies. And respondents identified environmental concerns as the most important trend influencing public expectations of business.

Resources, constraints, overpopulation, and pollution are just a few of the trends driving environmental products, services, and business practices. Here’s what’s growing:

• Shortage of raw materials and development of new materials: With the cost of oil on the rise, demand for non petro-chemical-based materials is increasing, and the same goes for other natural resources.
• Increasing population: By 2050, the global population is estimated to reach 9.2 billion people.
• Environmental sustainability: Huge opportunities exist with reusing, recycling, and creating biodegradable products. Clean energy is booming with solar cells, wind turbines, and eliminating preventable energy loss.

A recent McKinsey Global survey assessing the impact of societal issues found that executives fully expect the environment, including climate change, to affect shareholder value far more than any other societal issue during the next five years. Their concern, in fact, now exceeds that of consumers. Certainly these CEOs are responding to increasing pressure from employees and consumers, but some also see opportunities to gain a competitive advantage and address global concerns.

Consider how Dupont created an opportunity from a threat. Its newest product is called Sorona, a corn-based version of plastic. Dupont clearly identified the growing threat of high oil prices and turned it into an opportunity by creating a solution. Sorona, referred to as the new nylon, is available commercially and is being used for everything from underwear to carpet.

Trends and issues may come and go in slow motion, but keeping an eye on them could be the key to your company’s boom – or bust. Remember, your operating environment is the entire outside circle influencing your business.

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