It’s possible that our economy may never return to “normal,” Tyler Cowen, an economics professor at George Mason University, recently wrote in the New York Times. While some economists believe the slow wage growth and low labor participation we’re now seeing are temporary conditions, Cowen argues that they’re more indicative of structural dysfunction and fragility. If that’s the case, he says, the economy may be experiencing a “reset.”
Put another way: The economy has fundamentally changed and we’re now operating in what McKinsey has called a “new normal.”
While I do think we’re seeing a shift in how businesses function, I’m not sure the future is as grim as Cowen fears. To be sure, the Great Recession made a dramatic impact on the economy, but over the last several decades we’ve also seen rapid advances in technology, increased globalization and competition, and a complete transformation of the way we communicate with one another.
And, while we’ve shifted from an industrial to a knowledge economy, the workforce has developed capabilities that enable businesses to be more nimble than they’ve ever been. The new normal that Cowen sees as a concern may, in fact, offer much promise.
The new normal makes it more important for organizations to create sustainable structures.
One thing’s certain: Today’s economy requires that organizations develop structures that support sustainable growth. Companies must make sure they’re flexible enough to pivot quickly when business realities change or they’re challenged by swifter, more aggressive competition.
If your organization hasn’t made this transition yet, what must you do to “reset” and adapt to new circumstances? From my point of view, the sustainable organization has three qualities.
1. Strategic Flexibility
First, organizations must embrace the idea of working in a marketplace that is not only dynamic, but frenetic. Spurred by technology, consumer behaviors are changing rapidly, continuously generating new demands along with a steady stream of emerging opportunities. Your strategy team must constantly be on the lookout for new trends and new markets – and be able to pivot quickly to take advantage of them.
You may have 80 percent of the expertise in-house, but often the 20 percent you’re missing is the linchpin.
2. Talent Alignment
When a new opportunity is identified, your team may have 80 percent of the expertise it needs to meet it. While in many cases, that may be enough, chances are the 20 percent you’re missing contains the linchpin. Sustainable organizations recognize that they need instant talent to fill knowledge and experience gaps. Talent on demand is a cost-effective way to bring in that expertise. If you know where to look, plenty of seasoned executives are available who can bring you the experience and knowledge necessary to take you where you want to go.
3. Operational Excellence
Finally, sustainable organizations keep a close eye on the processes, systems and tools needed to keep pace with changes in strategy and growth. As companies shift into higher gears and reach new levels of business needs, they’ll require professionals who’ve had experience running operations that can meet their demands. (This is a common problem for successful entrepreneurs, as I discussed in a previous post.)
The keys to winning today are foresight and flexibility. Sustainable strategic organizations evidence both. To remain relevant and profitable in today’s dynamic business environment, they embrace the need for frequent shifts in strategy. They bring in the right people with the right expertise, whenever and wherever they need them.
Yes, we may be in the middle of a great “reset.” But the opportunities for smart organizations and experienced independent consultants are many.