Alexandra Levit's Water Cooler Wisdom

Modern Businesses: Local Versus Global

Not long ago, offshoring of goods and services was a foolproof way to keep costs down—if you could manage it. Now, however, due to changing markets, local sourcing is experiencing an upswing. Helped by Gabriele Rizzo, futurist adviser for private and public international defense organizations, and Alexander Bird, CEO of micronutrient food manufacturer Kiss My Keto, let's look at the pros and cons of local versus global supply chains.

Benefits and Drawbacks of Local and Global Supply Chains

Since local supply chains are often smaller, local suppliers may require less of an initial investment and allow smaller orders, which results in lower stored inventory costs.

In some foreign countries, worker wages are increasing, so the gap in labor costs between local and global supply chain strategies is diminishing. For instance, according to Eurostat data released in the fall of 2018, wage growth in the eurozone reached its fastest rate for two years, accelerating in the second quarter of 2017.

Also, goods and services production is becoming more specialized and geared to local customers, and in such cases, there is often an advantage of being physically close to the buyer. These factors led global management consulting firm AlixPartners to report that 69 percent of the 106 U.S. and western European manufacturing firms that responded to their 2016 annual survey were considering moving production closer to their home bases.

But global supply chains have substantial benefits as well. Today's economy is unquestionably global and having only local operations may result in lost opportunities and stalled growth.

Also, depending on your industry—and especially if you are in manufacturing—you may face significant skills shortages in certain U.S. regions, but can readily find available labor in countries such as China and Mexico. Raw materials may also be less expensive in a foreign market, and global supply chains also allow businesses to take advantage of the innovation afforded by emerging markets.

That said, time lags, shipping delays and language and communication barriers associated with global supply chains may negatively impact a business's speed, agility and on-time delivery record.

Finally, political situations can sour quickly, so global supply chains in certain regions of the world may carry a higher risk of business disruption overall.

For more where this came from, check out the American Express Business site.

2019 Market Trends to Expect

The overall financial health of the global economy, as well as the resources we have available to make intelligent projections, will greatly impact business success in 2019. Let's have a look at two of the major market trends to expect this year.

Continuing Stock Market Volatility

We enter 2019 with the financial sector in a bear market. (A bear market is an economy in which security prices drop 20 percent or more and stay low for a long time period.)

The 2018 market was volatile and the stock market is currently in the correction process. The most critical factors relating to stock market volatility are trade policy and interest rates.

“The trade war can expand suddenly into multiple industries and cause spillover effects," says Juan Carlos Arancibia, markets editor for Investors Business Daily.

What does this mean for your business?

In the simplest terms, market trends indicate a sluggish economy—you should pay closer attention to your finances to avoid unnecessary losses. When it comes to investing, try to avoid having a knee-jerk reaction. If you can, stay focused on your long-term goals even if the pull to sell is strong.

On the customer spending side, if you are in the business of non-essential products and services, you can expect sales to decrease in a bear market. You may need to adjust your offering so that it's more in line with what customers need today.

Finally, it's a good idea to decrease your own expenses so that you don't need to borrow more money during this time. Due to rising interest rates, be very careful with new credit lines so that you don't get into an irreversible debt cycle.

Another of the critical market trends is trade policy. Keep an eye on new tariffs being issued by the U.S. government. A tariff is a tax on an import or export, and recently, we have seen new tariffs levied on goods coming from Canada, Mexico and the EU—not to mention China. These tariffs can increase costs, but you should balance how much of these costs you can safely pass on to your customers (i.e. through raised prices) without damaging your cash flow.

For more of what to expect this year, head on over to the American Express Business site.

Business Innovations of the Future

As a futurist, I often get asked to predict the business trends that organizations can afford to ignore, because, while they generate a lot of buzz, they are also likely to fizzle out. On the other hand, we must also pay attention to business innovations that are gathering such rapid strength that adoption is now essential. Let's look at a few.

Blockchain

A blockchain is a data structure that builds a digital ledger of transactions and shares it among a distributed network of computers. Using cryptography, each participant interacts with the ledger in a secure way without the need for a central authority. Bitcoin was the first app built using the platform in 2008, with a premise of sending digital payments between any two parties without the help of a financial institution. Bitcoin has now been joined by hundreds of other cryptocurrencies, and the model has moved out of financial services: organizations, employees, and customers are using it for all types of transactions.

Deep Learning

Deep learning (programming machines to mimic the actions of the human brain), is driving a whole new set of business innovations. It's the process of training computers to recognize patterns in data and then classify and categorize them as a human brain could. Together with complex algorithms, deep learning is already helping machines to participate in defining project scope, analyzing risks, developing budgets and allocating resources. It's catching on because it has massive implications. 

For the rest, have a look at the American Express Business site.

Key Findings from the World Economic Forum’s Future of Jobs Survey (Part II)

Last week, I shared some compelling results from the World Economic Forum’s 2018 Future of Jobs Survey. To recap, this research set out to represent the current strategies, projections and estimates of global business, with a focus on large multinational companies and more localized companies of significance due to their employee or revenue size.

Let’s examine some additional highlights from the report:

• Emerging in-demand roles: Among the range of established roles that are set to experience increasing demand in the period up to 2022 are Data Analysts and Scientists, Software and Applications Developers, and Ecommerce and Social Media Specialists, roles that are significantly based on and enhanced by the use of technology. Also expected to grow are roles that leverage distinctively ‘human' skills, such as Customer Service Workers, Sales and Marketing Professionals, Training and Development, People and Culture, and Organizational Development Specialists. There will also be a variety of roles related to understanding and leveraging the latest emerging technologies: AI and Machine Learning Specialists, Big Data Specialists, Process Automation Experts, Information Security Analysts, User Experience and Human-Machine Interaction Designers, Robotics Engineers, and Blockchain.

• Growing skills instability: Given the wave of new technologies and trends disrupting business models and the changing division of labor between workers and machines transforming current job profiles, the vast majority of employers surveyed for this report expect that, by 2022, the skills required to perform most jobs will have shifted Global average skills stability—the proportion of core skills required to perform a job that will remain the same—is expected to be about 58%, meaning an average shift of 42% in required workforce skills over the 2018–2022 period.
• A reskilling imperative: By 2022, no less than 54% of all employees will require significant re- and upskilling. Of these, about 35% are expected to require additional training of up to six months, 9% will require reskilling lasting six to 12 months, while 10% will require additional skills training of more than a year. Skills continuing to grow in prominence by 2022 include analytical thinking and innovation as well as active learning and learning strategies. Sharply increasing importance of skills such as technology design and programming highlights the growing demand for various forms of technology competency identified by employers surveyed for this report. Proficiency in new technologies is only one part of the 2022 skills equation, however, as ‘human’ skills such as creativity, originality and initiative, critical thinking, persuasion and negotiation will likewise retain or increase their value, as will attention to detail, resilience, flexibility and complex problem-solving.
• Current strategies for addressing skills gaps: Companies highlight three future strategies to manage the skills gaps widened by the adoption of new technologies. They expect to hire wholly new permanent staff already possessing skills relevant to new technologies; seek to automate the work tasks concerned completely; and retrain existing employees. The likelihood of hiring new permanent staff with relevant skills is nearly twice the likelihood of strategic redundancies of staff lagging behind in new skills adoption. However, nearly a quarter of companies are undecided or unlikely to pursue the retraining of existing employees, and two-thirds expect workers to adapt and pick up skills in the course of their changing jobs. Between one-half and two-thirds are likely to turn to external contractors, temporary staff and freelancers to address their skills gaps.
• Insufficient reskilling and upskilling: Employers indicate that they are set to prioritize and focus their re- and upskilling efforts on employees currently performing high-value roles as a way of strengthening their enterprise’s strategic capacity, with 54% and 53% of companies, respectively, stating they intend to target employees in key roles and in frontline roles which will be using relevant new technologies. In addition, 41% of employers are set to focus their reskilling provision on high-performing employees while a much smaller proportion of 33% stated that they would prioritize at-risk employees in roles expected to be most affected by technological disruption.

Overall, said the World Economic Forum, the report’s findings suggest the need for a comprehensive ‘augmentation strategy’, an approach where businesses look to utilize the automation of some job tasks to complement and enhance their human workforces’ comparative strengths and ultimately to enable and empower employees to extend to their full potential. However, to unlock this positive vision, workers will need to have the appropriate skills enabling them to thrive in the workplace of the future and the ability to continue to retrain throughout their lives. Crafting a sound in-company lifelong learning system, investing in human capital and collaborating with other stakeholders on workforce strategy should thus be key business imperatives.  A mindset of agile learning will also be needed on the part of workers as they shift from the routines and limits of today’s jobs to new, previously unimagined futures.

Want to learn more about how you can prepare for the future of work? Check out the new book, Humanity Works: Merging Technologies and People for the Workforce of the Future.

 

Key Findings from the World Economic Forum’s Future of Jobs Survey (Part I)

What is the future of jobs? The answer to that question depends on who you ask, and in what context. The World Economic Forum has its point of view, which it explored in The 2018 Future of Jobs Survey. This original research set out to represent the current strategies, projections and estimates of global business, with a focus on large multinational companies and more localized companies of significance due to their employee or revenue size.

The survey was distributed to relevant companies through extensive collaboration between the World Economic Forum and its constituents, amplified by regional survey partners. The survey collection process was conducted via an online questionnaire, with data collection spanning a nine-month period in 2018. In total, the report’s data set contains 313 unique responses by global companies, collectively representing more than 15 million employees in 12 industry clusters and 20 economies. This makes it one of the broadest reaching studies of its kind.

Some of the more compelling findings included:

• Drivers of change: Four specific technological advances—ubiquitous high-speed mobile internet; artificial intelligence; widespread adoption of big data analytics; and cloud technology—are set to dominate the 2018–2022 period as drivers positively affecting business growth. They are flanked by a range of socio-economic trends driving business opportunities in tandem with the spread of new technologies, such as national economic growth trajectories; expansion of education and the middle classes, in particular in developing economies; and the move towards a greener global economy through advances in new energy technologies.
• Accelerated technology adoption: By 2022, according to the stated investment intentions of companies surveyed for this report, 85% of respondents are likely or very likely to have expanded their adoption of user and entity big data analytics. Similarly, large proportions of companies are likely or very likely to have expanded their adoption of technologies such as the internet of things and app- and web-enabled markets, and to make extensive use of cloud computing. Machine learning and augmented and virtual reality are poised to likewise receive considerable business investment.
• Trends in robotization: While estimated use cases for humanoid robots appear to remain somewhat more limited over the 2018–2022 period under consideration in this report, collectively, a broader range of recent robotics technologies at or near commercialization—including stationary robots, non-humanoid land robots and fully automated aerial drones, in addition to machine learning algorithms and artificial intelligence—are attracting significant business interest in adoption. Robot adoption rates diverge significantly across sectors, with 37% to 23% of companies planning this investment, depending on industry
• Changing geography of production, distribution and value chains: By 2022, 59% of employers surveyed for this report expect that they will have significantly modified how they produce and distribute by changing the composition of their value chain and nearly half expect to have modified their geographical base of operations. When determining job location decisions, companies overwhelmingly prioritize the availability of skilled local talent as their foremost consideration, with 74% of respondents providing this factor as their key consideration.
• Changing employment types: Nearly 50% of companies expect that automation will lead to some reduction in their full-time workforce by 2022, based on the job profiles of their employee base today. However, 38% of businesses surveyed expect to extend their workforce to new productivity-enhancing roles, and more than a quarter expect automation to lead to the creation of new roles in their In addition, businesses are set to expand their use of contractors doing task-specialized work, with many respondents highlighting their intention to engage workers in a more flexible manner, utilizing remote staffing beyond physical offices and decentralization of operations.
• A new human-machine frontier within existing tasks: Companies expect a significant shift on the frontier between humans and machines when it comes to existing work tasks between 2018 and In 2018, an average of 71% of total task hours across the 12 industries covered in the report are performed by humans, compared to 29% by machines. By 2022 this average is expected to have shifted to 58% task hours performed by humans and 42% by machines. In 2018, in terms of total working hours, no work task was yet estimated to be predominantly performed by a machine or an algorithm.
• A net positive outlook for jobs: About half of today’s core jobs—making up the bulk of employment across industries—will remain stable in the period up to One set of estimates indicates that 75 million jobs may be displaced by a shift in the division of labor between humans and machines, while 133 million new roles may emerge that are more adapted to the new division of labor between humans, machines and algorithms. These estimates represent two parallel and interconnected fronts of change in workforce transformations: 1) large-scale decline in some roles as tasks within these roles become automated or redundant, and 2) large-scale growth in new products and services—and associated new tasks and jobs— generated by the adoption of new technologies and other socio-economic developments such as the rise of middle classes in emerging economies and demographic shifts.

Stay tuned for more highlights next week. In the meantime, want to learn more about how you can prepare for the future of work? Check out the new book, Humanity Works: Merging Technologies and People for the Workforce of the Future.

 

Are You Strategic About Military Hiring?

Many organizations have prioritized the hiring of military veterans in recent years. This is commendable, as military hiring requires a different strategy than civilian hiring because veterans do not have exactly the same needs as traditional hires. For instance, they are often attracted by different things during the recruitment process, and sometimes respond better to alternative training and development approaches.

The Talent Activation, the Employee Experience, and Skill Development survey, conducted online within the United States by DeVry University on behalf of the Career Advisory Board in August 2018 examined how organizations are currently designing and executing specific employee experiences at the recruitment, onboarding, learning and development, and performance evaluation stages.

Survey respondents included 505 US-based individuals (53 percent male, 47 percent female) with full-time positions at the supervisor level or above, in companies with more than 500 employees (mean company size was large at 15,000). Our respondents’ primary job responsibilities include the hiring, development, and management of employees.

In parts of the survey, we looked specifically at military hiring and development practices. Specifically, we asked our respondents how much they agreed or disagreed with the following statement: My company has implemented a successful military veteran hiring strategy. Sixty-four percent agreed, confirming that not only do such strategies exist, but also that they have been honed in a majority of organizations.

 We also asked the participants how much they agreed or disagreed with this statement: My company has implemented a comprehensive talent development program that capitalizes on the professional strengths military veterans bring to the workplace. Refreshingly, 67 percent agreed.  And, according to our respondents’ verbatim responses, material is often customized to resonate with veterans’ unique perspectives.

On the subject of the verbatim responses, the survey inquired about where respondents were focusing their thoughts and energies with respect to military veteran hiring and onboarding. Some of the initiatives they cited in the verbatims included:

• Hiring talent acquisition staff with military backgrounds
• Matching current employee veterans with new hires
• Engaging with Military Transition Centers
• Using regional military outplacement centers effectively
• Performing outreach to veteran groups in relevant locations
• Maintaining strong relationships with local VAs
• Holding veteran-specific job fairs
• Partnering with military recruiters
• Sourcing talent from military leaders who have commanded troops
• Participating in military-sponsored job events
• Offering interview and hiring preference to veteran candidates
• Creating onsite affinity groups for military
• Providing tuition assistance and educational incentives
• Emphasizing how military experience translates to work experience
• Understanding and communicating about PTSD and other symptoms veterans experience
• Placing veterans into supervisory or leadership jobs
• Developing veteran-specific onboarding programs to ease the transition to civilian work

For more survey results, check out the DeVry WORKS website.

Why You Probably Need More Training, Not Less

In my work as a business and workforce consultant, I’ve observed that in times of change and uncertainty, some organizations stop spending money – and especially money that goes to employee training and development. However, given the future work trends of cross-functional teaming, workforce-wide digital fluency, and an emphasis on uniquely human skills, this may be a short-sighted approach. Let’s look at these one by one.

Cross-Functional Teaming

I’ve noticed that employees are starting to move around organizations with greater speed, and so they may need to know more skills than were required in the past. Even if they received a solid university education, employees might well be moved to a role in which nothing they learned in their degree program applies. For instance, it’s not unusual for someone trained in finance to end up in marketing, and vice versa. And, even those schooled and working in marketing often find it beneficial to have cross-functional expertise in finance.

My hunch is that employer training might not be able to keep up with the reskilling and upskilling requirements of cross functional teams, and this is why there are gaps. And, in the Career Advisory Board’s 2018 survey, Talent Activation, the Employee Experience, and Skill Development, 77 percent of respondents agreed with the statement: In my organization as a whole, I am concerned about employee skills gaps.

In the study, the greatest skills gaps were observed in the areas of technology/digital fluency (cited by 62 percent of respondents), communication (56 percent), business acumen (48 percent), diversity and cultural awareness (46 percent), and customer service (42 percent), and skills gaps affect employees at all levels. And, when asked about barriers to closing skills gaps, our respondents cited a too-small training budget most frequently.

If anything, it’s my opinion that cross-functional teaming requires larger training budgets, not smaller ones.

Workforce-Wide Digital Fluency

In the Career Advisory Board’s 2017 Job Preparedness Indicator survey, we defined an applied technology skill as a skill that is needed by employees to leverage the right technology to do their jobs. It’s another way to talk about digital fluency, and the research indicated that a majority of employers is now looking for these skills in new and existing employees.

Training existing employees in applied technology skills is a major challenge, in part because current professionals did not receive this type of instruction via traditional education paths. In response, many survey respondents are ensuring that their workforces continuously train and retrain on applied technology skills through the development of internal courses (40 percent), internal trainings (38 percent), tuition reimbursement (35 percent), and external trainings (31 percent). Only one-fourth said their organizations are taking no actions to develop this skillset.

As discussed above, however, developing skillsets can be expensive – especially when one round of training isn’t enough. So, in my recommendation, employers should have a specific and ongoing budget set aside for applied technology skills alone – in addition to other training requirements.

For more where this came from, check out the DeVry WORKS website.

 

Leading a Team in the Future Workplace

 

 

When writing my brand new book Humanity Works: Merging People and Technology for the Workforce of the Future, I found a business world in the process of rapid transformation. I learned that one way to have a sustainable competitive advantage in a constantly evolving, virtual, global and automated environment is to master how to lead a team. Leaders who do this may well find that running their organizations at this time in history will be rewarding and full of opportunity.

But what exactly will the future look like? In order to be in a good position to take advantage of pending developments, owners may want to understand what's coming and master how to lead a team.

I asked Jeff Epstein, owner of referral software company Ambassador Software and Nathan Klarer, founder and chief operating officer at IT talent provider Datyra to weigh in on a few of the more pervasive trends and how leaders can go beyond them to cope successfully with the coming changes.

Flexible and Distributed Workplaces

The average employee in the 2030s probably won't be work in a single physical environment, but where and when it's most convenient and impactful.

 

“The idea of offices is already changing, with a switch to more 'WeWork-style' workplaces," says Epstein. “Shorter-term teams will be assembled to solve specific business problems, and will operate virtually."

Epstein is referring to what is known as a distributed workforce, which reaches beyond the restrictions of a traditional office environment and is often dispersed geographically over a wide area.“Teams are becoming more multi-disciplinary as distributed workplaces allow for talent to specialize," says Klarer.

In considering how to lead a team in the future, owners may have to account for changes in workplace dynamics.

“The most fundamental change is that real-time communication is commonplace," says Epstein. "Today, with a litany of communication tools, teams have access to information—and people—immediately, and people expect to chat with team members at any time."

This means that leaders will need to open their literal and metaphorical doors and devise ways to be more accessible to team members, providing guidance and direction outside the confines of traditional business hours without losing their own sense of balance and privacy.

For the rest of the piece, check out the AMEX OpenForum.

Secrets for Driving Culture in Business Today

Driving culture involves reinforcing beliefs and behaviors that determine how that organization's leaders and employees interact internally and externally.

Is there a formula for it?

Not exactly.

There are, however, certain best practices that I've learned along the way as an entrepreneur, and also by consulting two fellow business owners: Jacqueline Marrano, owner of accounting firm Marrano Solutions and Reuben Yonatan, founder and CEO of customer relationship software company GetCRM.

 1. Focus on recruitment and onboarding.

Driving culture starts with your people. And if you are clear about your mission, vision and values, you can attract potential employees with similar sensibilities.“We position our culture at the forefront within all our hiring materials and spend lots of time searching for the most motivated and driven individuals to join our company, because the quality of our employees has a direct impact on customer satisfaction, product output and brand reputation," says Yonatan.“And, when new hires come aboard," he continues, "we make very clear what's expected of them and how their role is meaningful not just in the office, but meaningful in the real world, so they can be proud of where they work and what they do."

2. Foster a meaningful employee experience.

Employees now expect an experience at work that is comparable to the experience they have at home via services like Netflix and Amazon. You choose what you want to do when you want to do it, and interactions are easy and convenient.

Your unique employee experience should cover all facets of the employment lifecycle, including recruitment, onboarding, learning, performance and transition. This involves understanding and promoting the activities employees undertake at each stage that can help immerse them in the culture while also reaching maximum productivity and potential.

Yonatan believes he has created a culture for his employees to thrive, be themselves, have fun and do their best on every project.

“Our team members stay with us because we offer a flexible experience that develops and captivates them," he says. "We provide an exciting in-house culture with a lot of perks, but we also share how employees' roles are meaningful in the real world, and how they can do them from home, for example."

It's important to realize, however, that customized experiences are key: a one-size-fits-all approach may not be effective in driving culture, even for employees in the same location and role.

For the rest of the piece, head over to the AMEX OpenForum.

The Future of Agile Business

Considering the pace of change in today's world, agile business—the process of making quick decisions based on the information you have and the willingness to adopt new strategies as you go along—has gone from being a competitive advantage to a necessity for many organizations. 

I was curious about how modern business owners view the future of agile business, so I talked with Adelaida Diaz-Roa, co-founder of social travel network Nomo FOMO and Aaron Michel, partner at venture capital firm 1984 Ventures.

Both Diaz-Roa and Michel support agile business in their own enterprises. Diaz-Roa defines it as “having a work culture built around trust, speed, flexibility and transparency. It's about empowering everyone on the team to take risks to achieve the company's mission, knowing that their manager will support them if they fail." 

“Agile business enables a company to be more nimble, eliminate waste and reduce lead times," Michel adds.

Where Is Agile Business Headed?

Agile business got its start in the tech playgrounds of Silicon Valley, but it's becoming increasingly common in large corporations around the world. 

 

“Agile organizations are becoming flatter, trusting employees to act as business owners," says Diaz-Roa. “People operations are more important, leading to an increased focus on individual accomplishments."

For more thoughts of the future of agile business, visit the AMEX OpenForum.