The Organisation for Economic Co-operation and Development(OECD) recently released a paper on how they think the global economy will pan out over the next 50 years. According to this OECD paper entitled “Looking to 2060 – A Global Vision of Long Term Growth”, the shape of the global economy has changed substantially since the year 2000 and is undergoing systemic change.
The fundamental changes in wealth, income generation, sources of business value, and types of business activity, are all undergoing structural and systemic shifts at this time in our history. The changes can be summed up as a move towards operating in a new economy.
This OECD report predicts that by 2030 the fundamental shifts NOW occurring will have persisted and resulted in America’s GDP to shrink to 18% from 23% of the world total in 2011. China will have grown from 17% to 28% in the same timeframe. Australia will remain at about 1.1% but its mix of business services will have changed.
Dun and Bradstreet note that business failures overall have grown 30% per annum over the last 3 years and there are 128,000 businesses in Australia who in 2013 are likely to face financial distress. Insolvencies in the small business sector have jumped by 48 per cent over the last 12 months which shows the accelerating nature of the problem.
Whilst the GFC in 2008 and its aftershocks ever since have contributed to the numbers of failures, it also hides failure stemming from traditional business models no longer being adaptive to changing business and social environments in which these businesses operate in Australia. The overall commentary points to the emergence of a new economy which has different economic and social drivers and forces creating consumer behaviour.
We are moving towards an age that is dominated by complexity and indeed both innovation and imitation are still to be major aspects of the new economy. The difference and opportunity is that Conscious Business operators will be able to work with these market forces and mitigate their previous impacts on traditional business. Many people say to me “I do not see much change in business apart from the chaos and crisis in world markets”.
If you look you will notice elements of the new economy emerging. A casual read of business articles and journals will often uncover stories of emergent technologies and their targeted role in company success. The spokesperson is quite often now the “Vice President for Service Design” or the “Vice President for User Experience”. These strategic senior roles did not exist 5 years ago but are now becoming a requirement for any business serious about maintaining their edge in business. These roles encapsulate and provide leadership for the new paradigm of the technology innovation and imitation dynamics present in the business landscape.
Business advantage is increasingly not coming from quality, reliability, pricing, brand, promotion or any of the mechanisms espoused in traditional business theory. As an example one such change is the role of products in creating business success. Product commodisation is the new norm and so relying on innovative products alone is increasingly failing as a sustainable model of business success.
New products are being imitated or superseded in the matter of months now across many areas of retailing and so do not offer lasting differentiation in business. The trend in the new economy is revealing a shift to how to consistently provide compelling user experiences that create brand loyalty. Research also shows consumers are increasing looking to partner with brands who express key values that positively engage the local community through contribution, social responsibility, and environmental sustainability. The pathway to this targeted endpoint is increasingly becoming how I as a business with a good idea make my business succeed in the face of changing market forces.
My product or service is good but this and all the traditional marketing 5P mechanisms(price, product, promotion, place, packaging) just get me into business but not business success. The new economy is now being won by businesses that build innovation around the user experience of that product or service. We must become like Thomas Edison or Henry Ford over 100 years ago. They were able to assemble and understand the technologies available and being developed in society at the time.
They had a good idea and then innovated a new composite device, product or experience that was novel, engaging, desired and a total experience. If you want to thrive in the new economy you need to be able to link the existing environments to existing and new ideas, products, and then innovate the design and usage to create a new technology or a new experience. The new world is full of entrepreneurs who “get” the new paradigm and are early adopters to the waves of new technology.
They use it and adapt it to new means and ends. As an example look at the new Burswood Sports Stadium being constructed in Western Australia. The design and result could have been a conventional stadium which was just enlarged and fitted out with new facilities. This would have been a functional outcome. Instead the stadium is being approached as an “experience” and designed and fitted out accordingly.
The change involves two key concepts. The first is the removal of cars and the traffic jam experience that dogs many users of conventional stadiums. By the time you get to the footy you are frustrated, upset, angry, tense and negative if you were stuck in traffic or could not get parking easily, or were late as a result.
Likewise when you left you may have found that that great feeling of your team winning was suddenly lost as again you got into a traffic jam, found your car damaged, blocked in, or with a parking ticket. Community stakeholders may have resented the regular disruption to the fabric of their community by the congestion, noise, rubbish, vandalism and inconvenience generated by such events.
The new Burswood stadium responds to this set of negative emotional outcomes as they ban cars and shift people onto new and existing public transport channels that will be designed to overcome this set of negative pre and post stadium experiences. Secondly there will be “full experience dugouts” built which take the user experience beyond the private sponsor box to a whole new level. These new private corporate facilities are designed for the well heeled who will pay a premium for an enhanced user experience of the sporting event they are attending. These boundary side “feel clubs” are the ultimate in experiencing the event.
This is achieved by having the user senses as close in proximity to the event as possible, and with instant live footage on large screens inside the enclosure for their private comfort. This will be aided with comfortable seating, climate control, food, drink etc. All senses are targeted to be stimulated. This is new economy thinking. The experience is designed first and then the facility to bring that experience alive is designed second.
There is a methodology and set of processes that underpin such experience design and the resulting service design that results. Everyone in the new economy has to examine their service delivery chain and their product delivery mix to become best practice at creating a compelling, consistent customer experience that turns on their customers. A good product with a mediocre experience will create business failure in the new economy.
What does “Conscious Business” mean?
We coin the term “Conscious Business” partly because we consciously re-engineer the business to a consciously targeted customer and stakeholder experience.In the world of Conscious Business we take a business on the journey from being unconscious to the way in which it operates and is experienced by its customers, to a place of consciousness and reality about its existing operations. At Conscious Business Australia we take clients on this journey and then re-engineer the business and its people from this place. Our experience has been that many businesses are quite unaware (unconscious) to their markets, customers and stakeholders (e.g. staff) about how they act and behave.
Many businesses also have not considered their social responsibility and community contribution and how to tie these into the values of the business. When you tie-in social innovation processes with great customer experience outcomes you have laid the foundations for new economy success. The lesson here is more and more people are seeking out ethical businesses with which to associate. These businesses need to espouse their values consciously, build the values into every part of the business process, and critically into the user/customer experience chain, so customers can see them and associate with them consciously.
Given this needs to occur anyway for the innovation reasons mentioned earlier, I do not know of a business who could claim that they are currently doing both, and who do not need to revisit their customer experience chain, or their entire reason and processes of being in business, to position for the new economy. The risk is if you are not then one or more of your competitors already has or is doing so as we speak.
Many businesses undertake planning and review in December/January of each calendar year. You should critically examine which economy your plans, strategies and initiatives are taking you towards. It’s maybe time to give Conscious Business Australia a call in order to conduct a review of your business and where you have positioned yourself moving forward. Our Conscious Business Methodology (CBM) and its Customer Innovated Design (CID) processes are the intersection of psychology, neuroscience, design, project management, marketing, channel design, and digital and physical product design/innovation/imitation philosophies.