In 2023, the ability to rapidly respond has become the standard expectation. With increased uncertainty and mounting complexity, organizations face multiple emerging threats. To navigate these challenges successfully, business leaders must minimize the time between gaining insights and taking decisive action. The need for precise intelligence is paramount to swiftly manoeuvre around the multitude of obstacles that will inevitably arise.
To be prepared, executives face the challenge of predicting the future. Will a global recession emerge in the near future? How will the easing of pandemic restrictions impact hybrid work models? Can we expect a continuation of extreme weather events causing widespread disruption? Will geopolitical conflicts escalate or shift to new arenas? The manner and convergence of these threats will have significant implications for businesses on a global scale.
For instance, the duration of the war in Ukraine remains uncertain, causing disruptions in supply chains, talent acquisition, and overall business operations. As organizations contend with these consequences, they must also navigate rising cost pressures attributed to inflationary factors.
Simultaneously, companies are actively pursuing ambitious sustainability goals that demand collaboration both internally and across various ecosystems. In 2022, CEOs worldwide identified sustainability as the foremost challenge their organizations are likely to encounter in the next few years—an impressive ascent from its sixth-place ranking in 2021. Furthermore, purpose-driven consumers, who prioritize products and brands that align with their values, constitute the largest segment of shoppers, accounting for 44% of the market.
Talent shortages and salary pressures cripple growth
Hiring managers are facing significant challenges in 2023. Employers worldwide are grappling with the difficulty of filling open positions, with a projected 85 million jobs expected to remain unfilled by 2030. This labor shortage could potentially result in approximately $8.5 trillion in unrealized annual revenues by the same timeframe, as estimated by Korn Ferry. The situation is particularly pronounced in the United States, where job openings in September 2022 reached 10.7 million, nearly double the number of Americans seeking employment. Similar trends of job vacancy rates have been observed in the EU area, Singapore, and Australia, limiting growth opportunities and exacerbating the impact of inflation.
The scarcity of skilled workers is also driving up salary demands, while investments in talent stagnate. Research conducted by IBV indicates that 56% of employees prioritize salary above all other factors of employee engagement in 2022. Furthermore, 38% of Chief Supply Chain Officers (CSCOs) report that wage inflation has caused significant disruptions in the supply chain over the past two years. However, despite these challenges, salary budgets in the US for 2023 are expected to increase by only 4%, roughly half the rate of inflation seen in 2022.
Flexibility has emerged as a top priority for 2023, as more than one-third of employees (35%) express their unwillingness to apply for jobs that do not offer at least part-time remote work options. Two-thirds of employees seek to collaborate with employers in defining their work arrangements. However, despite the demand for flexibility, 77% of companies currently offering hybrid work arrangements intend to change their policies in 2023. Among them, 40% plan to require employees to work from the office four days a week, while 13% intend to bring employees back to full-time office work.
As worker preferences shift, and some organizations resist change, employee loyalty is diminishing. In the United States, employee engagement dropped to 61% in 2022, continuing the downward trend observed in 2021. Globally, IBV research indicates that 69% of employees consider the work they do as more important than the employer they work for, and approximately half (52%) have worked for their last employer for four years or less.
Close the talent gap
Promote collaboration and resource-sharing with ecosystem partners, and consider outsourcing workstreams that partners can handle more efficiently. Explore internal operational and employee data to identify hidden skills and talent within your existing workforce. Focus on finding talent with the necessary skills, rather than solely prioritising formal degrees or qualifications.
Engage in collaborative discussions with employees to jointly design and establish hybrid work models that cater to their individual needs. Encourage individuals to personalise their work arrangements and leverage technology that ensures secure remote work capabilities.
While organisations may not always have the ability to raise salaries, they can still support employees in enhancing their quality of life and saving time and money through various means. Look for opportunities to reduce employee expenses, such as providing personalised work arrangements that can help reduce childcare and commuting costs. By considering such avenues, organisations can contribute to improving employees’ financial well-being.
Balancing Privacy and Personalisation in Customer Relationships
Navigating the Gap between Futuristic Visions and Reality: Lessons from Google Glass and the Importance of Privacy
Capturing the full potential of immersive technology requires addressing privacy concerns and delivering cutting-edge experiences. The failure of Google Glass serves as a prime example of how a combination of privacy and aesthetic issues can hinder the realisation of a futuristic vision. Even after almost a decade, companies are still grappling with finding the right formula for success.
However, there are significant gains to be made by getting immersive technology right. The metaverse market, estimated at around $40 billion, is projected to grow at a compound annual rate of 39% between 2022 and 2030. To seize this opportunity, organisations must offer captivating experiences that not only fuel imagination but also establish strong and enduring customer relationships while effectively addressing safety and privacy concerns.
As the customer experience becomes increasingly immersive and spans across various digital platforms, security becomes paramount. A study by Cisco in 2022 revealed that 43% of consumers feel unable to protect their personal data, primarily due to a lack of data transparency. Moreover, 80% of these individuals expressed difficulty understanding how companies handle their data. Consequently, 37% of consumers have switched brands to safeguard their privacy, with even higher percentages in countries like India (68%), China (43%), and Mexico (47%).
In addition to privacy concerns, business leaders must distinguish between passing fads and truly transformative trends. Making informed and strategic investments that drive sustainable growth begins with understanding consumer desires and expectations when it comes to the products they purchase and the brands they support.
For instance, customers increasingly seek seamless shopping experiences that seamlessly transition between physical and digital realms. Hybrid shopping, which involves using both digital and physical channels, has emerged as the fastest-growing method, with 27% of global consumers adopting it, according to IBV research. Notably, this figure rises to 36% for Generation Z and 30% for Millennials, indicating a continued upward trajectory in the future.
Navigating a Confluence of Supply Chain Threats with Resilience
Navigating Ongoing Supply Chain Challenges with Flexibility, Innovation, and Robust Partner Networks
In 2022, companies relied heavily on flexibility, ingenuity, and extensive partner networks to overcome scarcity caused by geopolitical conflicts, labour shortages, and natural disasters. Securing access to critical products and materials, such as semiconductors, medications, and food items like milk, proved to be an ongoing challenge.
As we enter 2023, supply chain disruptions continue to threaten business continuity, according to research by IBV. Global Chief Supply Chain Officers (CSCOs) anticipate macroeconomic and environmental factors to be the top external forces impacting their organizations in the next few years. Natural disasters, in particular, have prompted leaders to re-evaluate their supply chain models. The frequency of billion-dollar disasters in the United States has significantly increased, necessitating a rethink of supply chain resilience as extreme weather events can disrupt critical links.
Geopolitical disruptions have also prompted companies worldwide to reassess their partner ecosystems. A third of CSCOs have already begun working with suppliers in new countries or regions, and this trend is expected to continue. Automation is seen as a key strategy to manage these growing business ecosystems. CSCOs anticipate integrating 32% of their intelligent workflows with ecosystem partners by 2030.
Additionally, many business leaders are reshaping their supply chains in response to the escalating threat of climate change. Nearly half of CSCOs anticipate substantial changes to their supply chain models due to sustainability initiatives in the next few years. Across the C-suite, executives are increasingly prioritising suppliers and vendors based on their sustainability profiles. A significant portion (32%) also plan to transform sourcing practices to reduce emissions, pollution, and waste in the next three years.
Sustainability strategies must be impactful—and realistic
Accelerating Sustainability Progress in 2023: Navigating Compliance and Stakeholder Pressure
In 2023, businesses face the imperative of making significant strides towards achieving new sustainability targets. As stricter regulations come into effect, organisations must accurately measure and disclose their environmental impact to ensure compliance. The EU’s Corporate Sustainability Reporting Directive (CSRD) will require approximately 50,000 companies to provide detailed information about their environmental footprint, with compliance timelines spanning from 2024 to 2028. The introduction of mandatory reporting for the Task Force on Climate-Related Financial Disclosures (TCFD) in the UK and the Securities and Exchange Commission (SEC) in the US further adds complexity to compliance efforts.
Furthermore, stakeholders are increasingly demanding that leaders set ambitious sustainability targets that go beyond the minimum requirements. As organisations develop comprehensive plans to achieve net-zero emissions and other ambitious goals, around half of CEOs report direct pressure from ecosystem partners, board members, and investors to improve sustainability outcomes.
However, many organisations are still in the early stages of turning their environmental intentions into tangible actions. In a recent survey conducted by IBV in manufacturing-oriented industries, 86% of executives stated that their organisations have a sustainability strategy in place, but only 35% had taken concrete steps to implement that strategy. Integration of sustainability objectives and metrics into business processes was found to be prevalent in only one-third of organizations. CEOs identified challenges such as unclear return on investment (ROI) and economic benefits (57%) and a lack of insights from data (44%) as key obstacles to achieving sustainability objectives.
As sustainability becomes a central focus of transformation efforts, leaders will increasingly rely on mature technologies to effectively track and advance their strategic sustainability priorities. In fact, 42% of CIOs consider sustainability as an area where technology can have the most significant impact in the next three years. Notably, organisations that have successfully integrated sustainability into their digital transformation initiatives, known as transformation trailblazers, have experienced faster revenue growth compared to their peers.
Consumers are not only increasingly conscious of sustainability and social responsibility but also willing to reward companies that demonstrate meaningful progress in these areas. Recent research by IBV highlights that approximately half (49%) of global consumers report paying an average premium of 59% for products branded as sustainable or socially responsible during their most recent purchase. Remarkably, even consumers in lower income brackets, with 4 out of 10 (43%) falling into this category, have been willing to pay the premium. This demonstrates that sustainability and social responsibility resonate across different consumer segments.
Furthermore, purpose-driven consumers serve as strong brand ambassadors. The research reveals that 58% of these consumers have recently introduced friends and family to a new brand or retailer, emphasising the positive impact of sustainability and social responsibility on brand loyalty and advocacy. Companies that prioritise these values not only attract environmentally and socially conscious consumers but also benefit from increased customer engagement and word-of-mouth recommendations.
The Rapid Expansion of Cyberattack Surfaces
The Evolving Landscape of Cybersecurity: Challenges and Opportunities
In the realm of cybersecurity, organisations face a dynamic landscape with both challenges and opportunities. Encryption codes have long served as the foundation of the cyber economy, but the potential future of quantum computers threatens the security of current data encryption methods. By 2030, quantum computers may be capable of cracking commonly used encryption approaches, necessitating the adoption of quantum-safe standards that could take several years to implement. As organisations navigate this impending risk, they must also address the immediate threats they face today.
Data breaches have become increasingly costly and impactful. In the United States alone, the average cost of a data breach reached $9.44 million in 2022, more than double the global average. Moreover, highly regulated industries continue to incur breach costs even years after the incident. The expansion of connected devices and services, particularly in the Internet of Things (IoT) landscape, has further amplified the attack surface. With the number of active IoT devices projected to grow rapidly, so do the vulnerabilities associated with them.
The complexity of cybersecurity challenges is compounded by a shortage of skilled professionals. Globally, there is a cybersecurity workforce gap of 3.4 million people, hindering organizations’ cyber resilience efforts. Executives identify the lack of talent as one of the greatest obstacles in maintaining effective cybersecurity. To address capacity and specialization challenges, organizations are turning to security AI and automation solutions.
While cybersecurity risks are a significant concern, the evolving technological landscape also presents opportunities for growth. More executives now view cybersecurity as a revenue enabler rather than a mere cost centre, recognising the potential to leverage secure technologies for business advancement. By embracing innovative approaches and investing in cybersecurity measures, organisations can navigate the changing cybersecurity landscape while unlocking new avenues for success.