Relationships the key to future success

Apr 03 2006 by Brian Amble Print This Article

Knowledge workers will become organisations most valuable source of competitive advantage over the next 15 years, whether in outward-facing functions such as sales or inward-facing ones such as knowledge management.

That's one of the predictions made in Foresight 2020, a new research report by the Economist Intelligence Unit (EIU) which explores what companies and economies might look like in 15 years time.

By way of comparison, remember that at the start of the 1990s, the Soviet Union still existed, German reunification had only just taken place and both the Internet and commercial email were in their infancy.

According to the EIU research, based on a survey of more than 1,650 executives, trends over the next 15 years will include the value of price competitiveness to customers declining relative to other factors, such as personalisation of products and quality of customer service.

As far as the way organisations will behave in the future, respondents to the survey said that employees' ability to communicate, to solve problems and to lead will be more important to future success than functional and technical capabilities.

"The focus of management attention will be on the areas of the business, from innovation to customer service, where personal chemistry or creative insight matter more than rules and processes", says Andrew Palmer, the editor of the report.

"Customers are looking for a higher level of interactivity and personalisation," said Rob Lloyd, Senior Vice President of Cisco, which sponsored the research.

"To be successful, companies have to invest in workers and technologies that can drive collaboration and interactions inside and outside the company across the entire value chain of customers, partners and suppliers."

Although increased automation of processes remains a prominent focus for productivity growth, particularly in non-services industries, respondents expect to focus more energy on improving organisational structures and communication as sources of enhanced productivity.

Processes, firms, customers and supply chains will fragment as companies expand overseas. As a result, effective collaboration will become more important. The boundaries between different functions, organisations and even industries will blur.

Following on from this, organisations will need to develop more collaborative relationships. A majority of the executives surveyed believe that high-quality relationships with outside parties will become more important as a source of competitive advantage between now and 2020.

Customers and suppliers will become more involved in product development, cross-functional and cross-border teams will work together more frequently and partnerships with other organisations will proliferate.

A knock-on effect of this change will be a big shift in IT investment away from general infrastructure and reporting and onto communications and collaboration technologies that enable knowledge management and customer service.

More broadly, the report also examines the effect of demographic change on economies, companies and customers. The favourable demographic profile of the US will help to spur growth, it predicted, while ageing populations in Europe will inhibit it. Industries will therefore need to target more products and services at ageing populations, from investment advice to low-cost, functional cars.

At the same time, there will be a redistribution of economic power. Emerging markets, China and India in particular, will take a larger slice of the world economy and non-OECD markets will account for a higher share of revenue growth between now and 2020 than OECD economies.