8 Ways To Future-Proof Your Business
Striving to future-proof a business may seem like a low priority for a startup or one trying to turn things around. However, taking time to really plan, strategize and drive the business and staff in a new direction is critical in today’s rapidly evolving world.
Research shows that the average tenure of companies on the Standard & Poor’s 500 index was 33 years in 1964, dropped to 24 years in 2016 and is expected to be a mere 12 years by 2027. Those are successful firms that became large enough to make it on the S&P 500. What about your firm? Globalization, technological transformations, and changing demographics ensure that your business tomorrow will not be around tomorrow, unless it strives to future-proof.
Future-proofing a company requires the leadership to make sure you are working “on” your business and not just working “in” your business. Here are 8 important ways to future-proof a business:
Create An Environment That Nurtures Innovation.
Predicting the future is not possible and many companies rely on playing follow the leader. However, the companies that will thrive are those that continually innovate to stay ahead of the potential competition. Innovation is not a project. It is a continual process for which you need to foster (or create) a supportive environment and culture. That can mean letting go of or updating past successes. Think of all the iterations the iPod has gone through. It also means giving employees freedom to experiment – and fail – and rewarding them for their work.
Avoid Putting All Your Eggs In One Basket.
Protect your business from dependencies. Most companies achieve their initial success with one great product, whether for a niche market or on a national or global scale. While strategists say focus on what you know, diversifying your product portfolio enhances your chances for survival. Additionally, do not become over-reliant on a small group of vendors or customers. This creates additional risks or potential points of failure.
Predict Future Demands.
Uber, Airbnb, and Amazon created demand that consumers did not realize they had, creating whole new markets like Clarence Birdseye and Henry Ford did a century ago. While you might not create something so revolutionary as frozen food, anticipating what customers may want down the road and helping them solve problems they do not know they have will go a long way to future-proof your business. This does not have to mean a major game changer. It can mean adding complementary products or services or new markets for existing products – Viagra was a heart medicine that had a side effect.
Have A Long And Shorter-View Business Plans.
Maintaining a well-developed business plan has long been considered important for the sustainability and operation of your business. With technological and market changes, the concept of a five-year strategic plan is outdated. Too many people viewed their five-year horizon as more of the same. So, many consultants emphasize working long-term and shorter-term planning timelines in parallel. The first timeline tries to anticipate market changes and disruptions in the coming 10 to 20 years. This challenges assumptions and encourages developing alternative scenarios. The shorter horizon aims at the next six to 12 months. The idea here is to determine what initiative or change will have the greatest impact on the business and zoom in on it.
For years, marketers and HR professionals have focused on the impact of millennials and aging baby boomers. That is important. However, one of the biggest demographic changes to your U.S. customer base and workforce in coming years is diversity. Approximately 81 percent of the U.S. population was white in 1975, according to the Census Bureau. Researchers predict that, in just a few decades, there will not be any racial or ethnic majorities in the country. This will impact marketing and recruiting. Yet, a Workforce 2020 study conducted in 2014 indicated that only 44 percent of American executives believe their teams can lead a diverse workforce. That needs to change.
Use Technology To Stay Relevant.
Retailers, newspapers and other industries have been devastated by technological innovations. Conversely, others have used it to expand their markets (using Etsy or eBay) and restaurants and grocery stores have embraced delivery services. In a world where people are controlling their appliances and finances with devices, it is impossible to discuss steps to future-proof a business without considering how technology can be used to change selling, delivery or automating.
Future-Proof Your Staff
Presumably, you have hired people who meet your current needs, but you need to think strategically about future workforce needs and skills. Just like a business wanting to keep up with changing times, your employees and their skills need to as well. According to the World Economic Forum, the U.S. Bureau of Labor Statistics projects 1.4 million more redundant jobs in the U.S. between now and 2026. To avoid redundancy, you need to provide training opportunities to ensure your staff’s skills remain relevant. Investing in your staff will help your business grow into new markets, stay current technologically and innovate products and markets. Learning and development helps keep an enterprise agile and shows employees that you value them.
Create A Succession Plan.
It may not seem intuitive when you are growing your business to think about succession planning. Most people think of succession planning when it comes to retirement or an exit strategy. However, the procedure to future-proof your business includes determining what will happen if you or people in critical roles leave or become ill. A succession plan (and things like key man insurance) can help you minimize disruptions in your business.
For more information on how to future-proof your business, contact HJR Global today.