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Published: January 22, 2008

 
 

Signals for the Coming Year

There are many reasons to look forward to this shift, despite the demands it will place on executive and HR strategists. According to recent research on strategic leadership, companies that are “great places to work” already outperform the S&P 500 by a factor of more than two-to-one; this may be the year that other companies start to understand the reason for their success.

6. Green technology as the “new Y2K.” Back in the late 1990s, when it was not clear precisely what it would require to reconstruct enterprise computers in advance of the date change at the turn of the millennium, the financial-services and corporate worlds bit the bullet and redesigned their technologies.

The global Y2K effort may or may not have prevented global computer collapse; we’ll never know. But its effect was immense either way. It spurred innovation, it promoted cleaner housekeeping, and it may well have lessened the impact of disasters such as the September 11, 2001, attacks — if only by making the financial-services community more aware of its capacity for safeguarding against breakdown and recovering from it.

With the threat of climate change, the governments and corporations of the world face a new Y2K-style challenge. Whatever the actual threat of human-created greenhouse gases may be, the perceived threat — and the urgency among groups like the Intergovernmental Panel on Climate Change — is going to drive both governmental and corporate activity for the forthcoming years. This will lead to a wave of housekeeping and innovation that, like Y2K, will have unexpected effects. We will probably see some of those effects emerging this year. This does not necessarily mean that conventional wisdom (for example, about the immediate returns from energy-efficient technologies) is right. But capital investment priorities will change, many companies will develop innovation or alliance skills that they otherwise would not, and waiting for government mandates will probably not be the most effective strategy.

7. IT’s Relevant Renaissance. Remember when information technology used to be considered a center of power for organizations? Remember when personal computers used to be fun — and fun was a source of productivity? Those times may be coming back. At the same time that companies recognize the viability of much lower IT spending — the idea that information technologies can consume less of a company’s overall budget than they have in the past — we are also seeing a rekindling of interest, enthusiasm, even excitement over the potential of information technology to revitalize a business. IT is returning as a subject of strategic interest in the executive suite, rather than merely as infrastructure that is taken for granted.

Partly, this renewed interest is driven by the cost pressures and new workforce already discussed, and partly by a new wave of IT productivity. Moore’s Law continues to hold, so computer power per dollar continues to increase. And the new wave of technological and social advances loosely known as Web 2.0, in which people use Web-based applications for a finer-grained, more participative interchange, continues to play a role. As enterprise technology evolves, each of the industry sectors will adapt in its own way, including consumer products, where point-of-sale data is suddenly available to marketers and retailers in real time; oil, where the “digital oilfield” is helping to resolve some labor shortages in exploration and production; power generation, which may require smart grid innovations to make the most of advances in nuclear power and renewable technologies; and health care, which may finally embrace the information technology revolution in full force during the next year or two.

8. The Digital Marketing Imperative. Booz Allen’s research during the past year — with the Association of National Advertisers (ANA), the Interactive Advertising Bureau (IAB), and the American Association of Advertising Agencies (AAAA) — has confirmed what many marketers have grasped intuitively: The game has shifted. New media have not just increased opportunities for advertising and drawn consumers away from broadcast TV and mainstream print; they have changed the culture, the required skill set, and the strategic value of the marketing function. As Booz Allen Vice President Christopher Vollmer notes in his forthcoming book Always On: Advertising, Marketing and Media in an Era of Consumer Control (McGraw-Hill, 2008), “We are now at the beginning of a consumer-centric digital age, in which the traditional ways of marketing products and services are no longer viable. The corporate demand for marketing accountability and return on investment has reached a crescendo. And, the previous exclusive relationships between marketers, ad agencies, and media companies are being configured in new ways.”

 
 
 
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Resources

  1. Amy Bernstein, “Making Innovation Strategy Succeed,” s+b Leading Idea, 1/08/08: An interview with Booz Allen Vice President Barry Jaruzelski lays out strategies for innovation that can provide overall resilience in the coming year. Click here.
  2. Kaj Grichnik and Conrad Winkler, “Manufacturing’s ‘Make or Break’ Moment,” s+b, Winter 2007: Excerpt from the forthcoming book Make or Break: How Manufacturers Can Leap from Decline to Revitalization (McGraw-Hill, 2008) describes such new operational challenges as scarcity and human capital issues — and how to address them. Click here.
  3. Rich Kauffeld, Johan Sauer, and Sara Bergson, “Partners at the Point of Sale,” s+b, Autumn 2007: Example of the new kinds of activities made possible by trends in media and IT. Click here.
  4. Christopher Vollmer, Always On: Advertising, Marketing and Media in an Era of Consumer Control (McGraw-Hill, 2008): Forthcoming book about how new media have changed the marketing function. Click here.
  5. Steven Wheeler, Walter McFarland, and Art Kleiner, “A Blueprint for Strategic Leadership,” s+b, Winter 2007: How to build an organization in which executives will flourish. Click here.