Rethink the path to a sustainable future for businesses and leaders
Create the future with a game-changing 2023 map (updated)
The last year has catapulted us into a heightened insight into the geopolitical and planetary challenges. It’s been a challenging year for many, and we must rethink the path to a sustainable future for businesses and leaders.
We have experienced continued adjustments with more digitalisation, social, and talent capability need. We continue to expect more transformation and unraveling of the ongoing systemic risk with uncertainty going forward. Now it’s time to consider the learnings from last year, reflect on what can be built on and what needs to be re-thought, and explore the major trends and prepare a game-changing plan for the following years.
“We need to practice acting in spite of fear, in spite of doubt, in spite of worry, in spite of uncertainty, in spite of inconvenience, in spite of discomfort, and even to practice acting when we’re not in the mood to act.” – T. Harv Eker
We are struggling with the impact of geopolitics and war, with increasing climate challenges and the impact of the pandemic on both people, health, economy, and supplies. At the same time, we have seen a real jump in digitalization, new ways of working, and a leap in innovation including increasing Artificial Intelligence applications.
Let’s embrace the new year with hope, determination, and a positive attitude, and make the most of the opportunities that it brings.
We have explored and summarised five major trends again this year. The overall trends remain the same but includes different new subareas. The short-term uncertainty is still very high and continues to impact most of the trends.
The five major trends that will impact us as leaders and businesses, which we will describe further below are
- Technology Accelerated Innovation
- Environment, Climate, and Resource Challenges
- Talent, Social & Changing Work
- Business Model, Ecosystem and Globalisation Shift
- Trust, Security, and Regulation
We have updated and renewed the insights of trends, and for each trend, we provide continuously updated Intelligence Maps, Briefing, and Curated Podcast Lists.
To handle the challenges, we need to increase our monitoring and insights and be prepared to innovate, adjust our strategies and reactions under the ongoing uncertainty, and align our resources with speed.
“True security lies in the unrestrained embrace of insecurity — in the recognition that we never really stand on solid ground, and never can.” — Oliver Burkeman
To help define your value proposition and game-changing plan for both yourself and your organization, we have further below outlined ways to create your plans for the year ahead.
And to continuously facilitate and inspire the Leadership from both the Board and Executive level, as well as the Business Change, we also provide intelligence maps, briefings, curated podcast lists, and tips on some books we released on that. You find them after the five trends below.
Our insights are also shared in keynote speeches, content sharing, virtual and blended courses, and in the board networks as the board networks Digoshen Exploring Leaders and Boards Impact Forum.
As the Intelligence maps, Briefings and Curated Podcasts are regularly updated, we hope you can use all this content as inspiration and come back to them as a reference.
Five Major Trends
Trend 1: Technology Accelerated Innovation
Every industry and organization will have to transform itself in the next few years. What is coming at us is more significant than the original Internet, and you need to understand it, get on board with it and figure out how to transform your business.”- Tim O’Reilly, CEO, O’Reilly Media
This trend includes rapid advancement and is exponential at its core. It builds on previous technology breakthroughs as the Internet, social media, digitalization of our companies and societies. In the coming years, the way we work, fight, age, communicate, solve problems, travel, trade, exchange information, live in cities, solve crimes, do business, vote, and connect to our loved ones will all be changed due to technology. Artificial Intelligence Adoption has doubled since 2017 and 50-60% of companies use AI, where 24% use it in service operations and 20% has embedded it into their products.
We will need to keep increased focus on Data, as it will be more and more considered the new most crucial asset. We will all need to boost data literacy to use it and protect it. Data volumes have grown massively, and cloud solutions allow us to access data anywhere. AI will learn to automate and help predict in most work areas, health, and energy. Automation will increase dramatically, and now with a focus on white-collar jobs. Chatbots will take over more customer service inquiries, the launch end November of Open AIs ChatGPT Chatbot with significantly improved capabilities have made many see the opportunities with AI. We will see the disintegration of companies and new ecosystems being formed. Improved virtualization and visualization will increasingly impact us through AR and VR. Cybersecurity will meet new challenges and solutions.
The activities in the so-called Metaverse or web 3.0 will increase. Metaverse is the emerging virtual-reality space where you can interact with a computer-generated environment and other users. Many fail to see the opportunities yet, however in the three first quarters alone Meta (former Facebook) spent 9.4 Billion USD in the area. The CAGR between 2020-25 in Augmented Reality and Virtual Reality will be 49%, and it till reach 161.1 billion USD in revenue by 2025. The industries with highest usage increase is healthcare, education, shopping, tourism and culture. Emerging human-computer interfaces will continue to integrate more of the human senses. Additional virtual connectivity will enable the integration and provide users with seamless services. The expansion of 5G will in itself drive continued innovation of what was previously not possible, from connected vehicles and machines to remote repairing, managed services, and surgery. Computing devices will exist from nano-scale to mega-scale, with advanced networking giving access to a world of integrated services.
We will continue to see a materials revolution. Responsive materials, lightweight, nanotechnology impacted, advanced composites, graphene-based, and the information about the materials will continue to be used for better usage and sustainability.
The integration of biology technology and humans will increase. Health innovation has skyrocketed over the last years and it will continue. We will continue to see vaccine development, antibodies and their alternatives, gene editing, sequencing, and faster time to market for drug discoveries and use.
Find continuous insights on the topic of Technology Accelerated Innovation from our Intelligence Maps, Briefing, and Curated Podcast Lists:
Trend 2: Environment, Climate, and Resources Challenges
“We are running the most dangerous experiment in history right now, which is to see how much carbon dioxide the atmosphere can handle before there is an environmental catastrophe.” Elon Musk, CEO of Tesla & SpaceX
The trend of climate change and resource scarcity is on top of many responsible people, governments, and company’s agendas, as its force of impacting the future is of existential importance. Global warming has started to severely impact many countries. Climate disasters costs over 15 billion the three first quarters 2022 in the US alone. The urgency to control and limit the impact on the climate has led to additional insights into embracing sustainability actions.
By 2025, 1.8 billion people will live in areas with severe water scarcity, and agriculture will need an additional 1 trillion cubic meters of water annually. US intelligence has identified 11 countries that could face extreme geopolitical instability due to climate change. As India is one of these countries, and India making up 55% of the global IT services industry, many companies have deep integrated dependencies on India, it might have profound impact on many western companies operations.
As we will see climate impact continue to challenge us, we urgently need to use technologies, circular models and sharing economies to find solutions, we need companies and governments to step up and we need diplomacy to find agreements for a joint livable planet.
2023 will be the year of sustainability strategy, measurements and action. Regardless of size or sector, every organization will need to have a sustainability strategy. And it will be just as important as their core business strategy and include both short and mid-term goals. The number of Corporate Sustainability Offers tripled during 2121.
To move forward, it will all be about sustainability data. Data will be the ticket to low-carbon innovation as well as proving your results. And sustainability will increasingly be used for competitive advantage. However 86 % of US investors believe that companies frequently overstate their ESG progress when disclosing results, and 72% of investors globally don’t believe companies will achieve their ESG commitments. 94% of US investors expect companies to establish and communicate a Net Zero plan, but 92% are concerned they are not effectively executing these pledges.
Companies will use more circular development, and more shelf space will be used for green products. 38% switched fashion brands due to sustainability practices 2021. There will be an increased push for more sustainable transports and electric vehicles EVs. EVs are up 62% in sales 2022, and companies are starting to remanufacturing with used parts. There is a related push for reinvention of energy systems, more renewable energy, and more carbon offsetting.
Some companies and countries will start to push for net-zero to be climate positive. Stakeholder influence and activism will continue to increase. Financial lenders and investors will increase their requirements, demanding a focus on ESG, Environment, Social and Governance, as long term insurance to profit, and regulations will grow and be more stringent.
Find continuously updated insights on the topic of Environment, Climate and Resource Challenges from our Intelligence Map, Briefing, and Curated Podcast List here
Trend 3: Talent, Social & Changing Work
“You have to value skills and not just degrees. You have to have new education models and new pathways to get people retrained and back into the workforce.” – Ginni Rometty, Chairman, President, and CEO of IBM Corporation
The trend that will continue to impact many of us will be the heightened need for talents in new competence areas, specifically technology and Leadership, the social change based on pandemic and climate impacts, and the ongoing demographic change in many countries.Many of our societies and companies was built for a very different outset. We will be challenged in our welfare systems, our ways of working, and our trust of societies, companies, politicians, news, and each other. Our regulations will need to become more adaptive.
Employees have moved the ladder to become the most critical stakeholder to companies an par with customers.
Our perspectives on the future of work will have to be explored with scenarios as the interdependency between businesses and societies is very high. Our transformation will include massive retraining and shift of work approaches, with unclear insights into how this will be funded.
For the critical skills, the fight will be anchored around the company purpose and the meaningful work provided. Fast digitalization requires new competencies and engagement in continued training.
The Talent trends are
- Reinvention – valid for both individuals and organizations, digital has given us plenty of new opportunities for reinvention. 69% of the worlds most admired companies value learning agility over career history.
- Scarcity – there is a mismatch of needed talents, and digital innovation accelerates it. There is also a need for change driving the great resignation; a third of employees are pondering leaving their jobs.
- Vitality – where employee wellbeing takes center stage.
- Sustainability – we need to walk the talk for a sustainable future, as organizations and as individuals.
- Individuality – also employee experiences get personal, from onboarding, performance, remuneration, development.
- Inclusivity – when unleashing the power of us all, what can we do better?
- Accountability – trust is the currency in relationships; say what you do, do what you say.
Critical individual skills for the future are critical thinking, planning, communicating, and exploring perspectives, as will role-modeling, inspiring trust, coaching, and collaboration. Self-management, risk-taking, grit, and persistence will move you forward and digital fluency, software, and digital system understanding will be needed.
The Social responsibilities and requests for transparency on social will increase. it will include human rights, health and safety, diversity and inclusion, and overall human responsibility.
The welfare systems will be under increased pressure due to pandemics and continued migration. The social contract with employees needs to be rethought between employees, employers, and governments. A more responsible, flexible, and agile approach will be required, supporting learning and employment growth and transition to new opportunities.
This will lead to organizational reinventions with a Work Change, as a spread of platform and marketplace businesses, industry mashups, more fluid organisations and project based work, Personalisation of productions and deliveries, increased human augmentation and more hybrid work and changes of where work is performed.
We need to think about work as capabilities instead of jobs, focus on enterprise leadership from several roles in the organization, ensure learning agility and retraining and onboarding.
Continuously learn about the topic of Talent, Social, and Changing Work from our Intelligence Maps, Briefings, and Curated Podcast List:
Trend 4: Business Model, Ecosystem and Globalisation Shift
“Building a successful business model isn’t about changing your company based on every bit of feedback, it’s about understanding whom to listen to and why” – Steve Blank, Startup Leader
Creating value for organizations has changed dramatically over the last few years. The value of firms used to be tied to tangible assets, and now more than 90% of the valuation of the largest companies are based on intangible assets.
Companies need to ask themselves how we create value and capture value in a new, more purposeful, and digital world. The value is increasingly moving from a firm’s value alone to the value a firm orchestrates in a new business model. We sometimes call them platform companies, but organizations can play many different roles in these new ecosystems.
International Monetary Found finds a slowing economic growth from their data monitor and lowered their latest outlook to 2.7%.
The new economy has pros and cons in its current state. We risk some business and digital breakup, including trade restrictions between China, the US, and Europe, which would devastate smaller economies. We could see a global GDP loss of 3-6 percent over the next decade that decoupling.
Another perspective of scarcity has arisen over the last years, coming from a perspective of abundance. It has been a scarcity in raw materials, strained supply chains, strained energy systems, shortage of workers, and even austerity laws.
The approach to grab the new value means that executives now plan to participate more in business ecosystems. By the end of 2023, organizations that share data, applications, or operations with their ecosystem partners through joint ventures will increase profitability by 5 percentage points. As open innovation, ecosystem partnerships, and integrated customer experiences become increasingly important; leaders need to move strategically to stay relevant. Leaders need to plan to pursue operational agility and flexibility going forward more aggressively. Technology, new business models, ecosystem collaboration, and scarcity design will be critical in those ambitions. Cloud-based business models will play a key role and increase speed in transformation for companies and industries. Leaders will increasingly try to make their businesses more modular. We are also challenged to find agreement and a more equitable and fairer world.
Find more insights on the topic of Business Model, Ecosystem, Globalization Shift from our Intelligence Map, Briefings, and Curated Podcast Lists:
Trend 5. Trust, Security, and Regulation
“Contrary to what most people believe, trust is not some soft, illusive quality that you either have or you don’t , instead trust is a pragmatic tangible, actionable asset that you can create “– Stephen R Covey, Leadership Author
Contrary to what most people believe, trust is not some soft, illusive quality that you either have or you don’t , instead trust is a pragmatic tangible, actionable asset that you can create – Stephen R Covey, Leadership Author
Trust is becoming increasingly important; it’s a belief in the future and is predictive. Trust is a rational and emotional process, both subjective and complex in nature. Consumers, employees, and executives find data protection, cybersecurity, treating employees well, ethical business practices, and admitting mistakes as critical top trust practices. To ensure trust, business leaders need to be clear in communication. Protect customer and employee data, be accountable to customers and employees. Deliver on financial commitments, have strong ethics and compliance functions, and deliver consistent customer experiences. As leaders, we need to have a voice on societal issues, be clear, be upfront, create belonging and listen more.
For consumers brand responses to societal events – including the pandemic (48%), climbing inflation (42%), climate change (32%), and Russia’s invasion of Ukraine (29%) – have impacted their brand choices in recent years more than personal life events (20%). Trusted brands earn action – 58% of respondents are more likely to purchase, 67% are more likely to stay loyal and advocate for them.
68% believe CEOs should step in when the government does not fix societal problems, and 66% think CEOs should take the lead on change rather than wait for governments to impose change. Some companies will start to appoint trust officers, be included in the sustainability role, and include ethics, AI, and security responsibilities.
Digital trust is a core part of our future trust. Ransomeware attacks continue to increase. 89% of ransomware incidents in 2022 used data exfiltration, an 80% increase from 2021. The average payout is 258k USD and increase of 13 % just since 2Q 2022. The payment form cyber insurance increased with 75% and the premiums are now so high that they are not attainable nor even accessible for many companies.
The concept of zero trust will continue to expand; design will include, never trust always verify. 61 percent of organizations predict a rise in cyber spending in 2023. 75 % have set aside funds fro security breaches. Four areas have started to improve but still need more work; instilling a culture of cybersecurity, cyber risk management, communication between management and board, aligning cyber with business goals.
Some of the key policy and regulation areas going forward include Sustainablity, Digital, Financial, and unfair competition and boundaries between countries, companies, and governments. So we will continue to see increased or changed regulations in areas as ESG (Environment, Social and Governance), Privacy, Ethics, Cyber governance, and Financial regulations incl Crypto assets.
Get more insights on the topic of Trust, Security, and Regulation from our Intelligence map, Briefing, and Curated Podcast List:
Charting the Future
Now, more than ever, we need to look towards the purpose of ourselves and our companies‘ purpose, chart our path both professionally and for our business, and create our best future.
And we will all be challenged on how to understand it and how to achieve it. But it is essential to take out the direction and start the journey for both organisation and individual leaders.
“Every successful organization has to make the transition from a world defined primarily by repetition to one primarily defined by change. This is the biggest transformation in the structure of how humans work together since the Agricultural Revolution.” –Bill Drayton
Responsible Leadership for a Game-Changing plan means as a Business or Organisation to
- monitor strategic trends and signals,
- understand your current position and need for change
- define your viable purpose to achieve a better future
- outline scenarios for potential futures, and prioritize
- create the best value creation opportunities based on scenarios and the capabilities possible to build on,
- define ambitious goals
- Identify low hanging fruits and business areas that’s no longer core to the business
- Identify needed innovation themes to explore
- focus on the long term and balance the short term,
- engage employees, partners in ecosystems, and customers in the journey,
- keep improving, experimenting, and adjusting to learn the best way forward quickly.
“Which new capabilities are necessary to unlock the dream and where do you need the biggest change in order to win in the future? – Jim Hagemann Snabe
To inspire you for needed changes, find more insights on the topic of Business Strategy and Transformation from our Intelligence Map, Briefings, and Curated Podcast Lists:
“Those who lead by example and demonstrate passion for what they do make it much easier for their followers to do the same.” -Marshall Goldsmith
Responsible Leadership for a Game-Changing plan means as an Individual; you need to work through
- to find the signals of future trends,
- building on your strengths and capabilities,
- finding the worthy purpose and main areas where you like to have your mission to add value
- clarify your ambition in those areas for both and short and long term,
- define your value proposition as a leader or board member
- develop your coaching ability to ask empowering questions and foster self-generated insights and goal-clarity
- find the resources or partners to co-develop and/ or support you on the journey, and
- find ways to experiment and find inspiration and energy to stay the course.
“Only when we are brave enough to explore the darkness will we discover the infinite power of our own light.” — Brené Brown
To inspire you for developing your leadership, find more insights on the topic of Modern Corporate Governance from our Intelligence Maps, Briefings, and Curated Podcast Lists:
To support the transformation, you might find it helpful to also take guidance from some of our articles and books, based on academic research we have contributed to over the last years. Based on our academic research on
- How Boards need to identify what is material and adjust the board focus and agenda, from webinar together with INSEAD “Rising to the ESG Challenge: Towards Effective Governance“
- Board Practices emanating from our board research together with INSEAD “What the world can learn from Nordic Boards”
- Board and Chairman Practices, the book “Leading a Board – European Chairman Practices” includes modern chairman practices and was released 2021.
- AI and governance, the book “AI Leadership for Boards” includes guidance on six focus areas to guide and supervise AI, released 2020.
- Corporate Renewal, Innovation and Sustainability, the article “Innovation and Corporate Renewal also Disrupt Boards” shares examples of transformative boards good practices. And we continue our quest and plan to release another book on “Corporate Renewal and Sustainability Innovation” this year.
For more exchange and interaction with fellow board directors, welcome to explore
- Digoshen Exploring Leaders – Focus Modern Corporate Governance for international leaders. Only for leaders with board memberships. Includes both open free interactive webinars, insights available via a digital platform, and deep dive international exchange programs
- Boards Impact Forum– Focus Driving Climate Action and Sustainability from the Boardroom – Webinars open for all, Membership and peer exchanges reserved for board members.
“The very best thing you can do for the whole world is to make the most of yourself” – Wallace Wattles
“Curiosity is the engine of achievement” Ken Robinson
And as a summary, for those of you that want to reflect on the overall and integrated level of trends and leadership insights, we have created Digoshen Recommends.
Digoshen Recommends inspires you on business, sustainability, digital and human perspectives and is shared as a continuously updated Intelligence Map, Briefing, and a Curated Podcast Lists:
“Longevity in this business is about being able to reinvent yourself or invent the future” – Satya Nadella
Now more than ever, it is time for purposeful actions. We wish you a healthy, peaceful, ambitious, and prosperous 2023!
Sources: Thanks to insights shared for the major trends by WEF, IFTF, World Bank, Blackrock, MIT Sloan, INSEAD, Roland Berger, PwC, Harvard, Institute of Coaching, McKinsey, BCG, Deloitte, EY, KPMG, European Commission, OECD, Edelman, Gartner, Forrester, IBM, Geniusworks, Frogdesign, Heidrick& Struggles, Korn Ferry, Trendhunter, Ericsson, InterstingEngineering, Vistage, Vnyz Research, Reuters, Trendwatching, Copenhagen Institute for Future Studies, Kairos Futures, Global Carbon Budget, Opimas, International Monetary Fund, Centre for Economics and Business Research and Digoshen Research
(This blogpost also builds on earlier blogposts from the last three years “Reimagine business and rethink leadership for a sustainable future” ”Direction for 2021 requires innovation in sustainability and learning to live with uncertainty” and “Trends for a Game-Changing Plan”)
At Digoshen we work hard to increase #futureinsights and help remove #digitalblindspots and #sustainabilityblindspots. We believe that Companies, Boards and Business Leadership Teams need to understand more of the future and the digital & sustainable world to fully leverage the potential when bringing their business into the digital & more sustainable age. If you are a board member, consider joining our international board network and master programs.
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