The Shape of Things to Come - How Recession Will Change the Way Businesses Work

I finally got round to reading an important piece of research by the Conferderation of British Industry (CBI) on the future shape of businesses in the UK. Its a fascinating document that describes how Britain’s business leaders believe recent events have accelerated some fundamental changes in the ways that businesses will compete and be structured over the next 5-15 years. Some of the report’s conclusions pick up on some specific strategic issues that have been raised by the recent recession - and are therefore relevant for students looking into this topic for their A2 exams.

The executive summary brings the key predictions together under four headings. The report comments are in blue. My emphasese are in bold/italic.

Capital and investment:
Businesses will reduce gearing and their reliance on debt, the attractiveness of which has declined. Wider sources of capital, such as supply chain finance and sovereign wealth funds, will become more important and CEOs will be more cautious in their use of capital for investment and innovation.

Workforce:
Businesses will respond to skills gaps by refocusing employee development through collaboration and achieving a greater return on investment in training. A new more flexible work contract with employees will be sought, building on the greater flexibility introduced during the recession.

Organisation and location:
New organisational structures will be created in many businesses as they continue to rationalise. Businesses will shift from transactional to collaborative relationships with a wide range of partners, including suppliers, universities and competitors. Supply chain dynamics will be much more complicated as risk becomes a more significant factor in decision-making.

Governance and sustainability:
Sustainability and ethics will be further integrated into the business model rather than as ‘add-ons’ to existing activities. Businesses recognise that demonstrating their accountability will be part of the new ‘licence to operate’ and will take a more extensive approach to governance. For larger businesses this will be an evolution of existing processes rather than a step change.