Finding Stability by Shaping Change

This week, Innosight's "2018 Corporate Longevity Forecast" outlined 5 trends that are causing large companies to lose ground more rapidly than in the past, while BCG's "Twelve Forces That Will Radically Change How Organizations Work" explored key growing changes to the corporate landscape. This blog post will explore how these two concepts intersect. I will also explore how creating "shared value" is a solution to shortening lifespans of large companies.

One major trend impacting how business is done is "technological and digital productivity". This was also touched on earlier in the semester through McKinsey's "Four Global Forces" article. Increased access to technology around the world makes it easier for new "disruptive" businesses to spring up and gain traction. Additionally, technology enables consumers to learn about new businesses and products more easily. These changes mean that corporate strategies need to adapt at a faster level than ever before, and many businesses have not figured out how to respond at the necessary pace.

Some companies are unable to adapt fast enough because of human capital conflicts and gaps. The rapid development of technology requires an equivalent rapid development in worker skill sets, but that is not happening fast enough to fill all needed roles. Additionally, younger workers bring new needs and demands to the workforce, and the process of integrating those demands into company culture is still ongoing.

Both BCG and Harvard Business Review's "Creating Shared Value" article offer a solution to help companies retain staff and foster public trust: pursuing social missions that go beyond profit. While at first I was skeptical of the sincerity of this idea, it makes sense as a differentiation strategy that will continue to engage staff and build brand meaning with customers. Additionally, creating "shared value" is necessary for maintaining a business landscape that is sustainable, responsive, and seen by consumers as "legitimate".

While "profit" and "social good" have traditionally been seen by many as contradictory, that view is uninformed and outdated. In many cases, pursuing social good can help grow profits. For example, many analysts have found that investing based on "environment, social and governance ratings" leads to higher returns (Moneyshow 2017). Additionally, truly socially responsible companies (not just those who donate to charity through "corporate social responsibility" programs) may be more likely to avoid the pitfalls that are leading more S&P 500 companies to lose ground. When interviewed by Forbes, investors Jason Teed and Ron Rowland said, "Taking a long-term, sustainable view ensures that a company can operate in perpetuity" (Moneyshow 2017). Thus, as the world continues to change more rapidly than ever before (Dobbs et al. 2015) and large companies are struggling to keep pace, the best way to find stability may be, paradoxically, to create change- and to make sure the change created is shaping the world for the better.

References
Anthony, Scott D. et al. "2018 Corporate Longevity Forecast: Creative Destruction is Accelerating". Innosight Holdings LLC, 2018, https://www.innosight.com/insight/creative-destruction/.

Bhalla, Vikram et al. "Twelve Forces That Will Radically Change How Organizations Work". BCG, 27 Mar. 2017, https://www.bcg.com/en-us/publications/2017/people-organization-strategy-twelve-forces-radically-change-organizations-work.aspx.

Dobbs, Richard et al. "The four global forces breaking all the trends". McKinsey & Company, Apr. 2015, https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-four-global-forces-breaking-all-the-trends.

Moneyshow. "Socially-Responsible Investing: Earn Better Returns from Good Companies". Forbes, 16 Aug. 2017, https://www.forbes.com/sites/moneyshow/2017/08/16/socially-responsible-investing-earn-better-returns-from-good-companies/#7e9f5d66623d.

Porter, Michael E. and Mark R. Kramer. "Creating Shared Value". Harvard Business Review, Jan. 2011.