The content for this blog was selected from a recent McKinsey report on global trends.
McKinsey is picking 11 key trends for 2021 and the post Covid ‘next normal’. Here is a summary as it could relate to your business. One thing is for sure everyone will be affected by the ‘next normal’.
There will be a post Covid Innovation Surge
We are already seeing this with 15,000 businesses being formed in the last quarter in NZ, compared to 11,000 being formed in the same period last year. That is an increase of 36% which is quite stunning when you consider the level of business uncertainty. It appears that people are seizing the moment to start their own business, or maybe have been displaced from employment.
Digital productivity will fuel the 4th industrial revolution
Every country will be so debt laden post Covid that the only practical way out of the debt will be increased productivity so governments will be looking to support this. It is clear that those businesses which invest in technology will draw ahead of other businesses. If you are concerned about this, why not ask our team about ways to improve your productivity? Productivity improvements can be as simple as hooking your Xero file up to Hubdoc so you no longer have to enter invoices, or get some software to help with your billing, or invest in training for your team. There are a range of ways to improve productivity, with no one having to work harder!
Note: Productivity is commonly defined as a ratio between the output volume and the volume of inputs. In other words, it measures how efficiently production inputs, such as labour and capital, are being used in an economy to produce a given level of output. What does this mean for your business?
It means thinking carefully about how you can do more with the same resources. As a start, it means working out what is important in your business and then starting to measure that. We would love to help you do this at Beany.
Online Purchases are Dominating
The forecast rate of growth in 2020 for online purchases was 24% globally, it was actually 33%. Customers are moving online at an increasing rate. No surprises here. Your digital presence must be strong and you will need to invest in this part of your business if you haven’t yet.
Resistance to purchasing online is decreasing. However, brand loyalty is also declining which means that your product must be on point.
This will be the next normal particularly in sectors such as finance. McKinsey estimates 20% of all global workers will be remote. Beany has been working virtually since we started so please feel free to ask for any pointers in this area.
Business Resilience is Key
In the new post Covid world, strong businesses will get stronger and weak businesses will get weaker; resilience will be key to survival. What do we mean by resilience? It means being able to identify your strengths and weaknesses quickly and adapt, if you need to.
Private Equity Funds are sitting on $1.5 Trillion ‘dry powder’
Although investment has slowed through Covid, fundraising has not (due to low returns elsewhere). It is estimated that PE is sitting on cash reserves of $1.5 trillion. This is seen even here in NZ with several large funds having closed successful raises recently. High levels of mergers and acquisitions are expected as restructuring will be required to be highly competitive in the new normal (see above comments on productivity).
If you’re thinking about capital raising, not a bad time to give this a shot!
Green Businesses are Targets for Acquisition/Investment
Not surprisingly, being a green business is on trend.
Business Being Part of the Community (stakeholder capitalism
There is a strong distrust of business in the wider community, but Covid has lessened the gap as stakeholders have become aware of the sacrifice business has made (and had to make) to serve the community.
This is an interesting move away from the more self serving business practices of the past and into a different era where business people can become truly a member of their community. As with the ‘green movement’, there are global organisations which can help you develop into these areas such as B Corp.
Final Three Trends
Vaccines, healthcare reforms and supply chain re-balancing round out the 11 trends. The supply chain issues have already been felt by many businesses as we struggle to import what we need and export what we want in this new normal.
What do you make of these trends? What’s missing, or what do you disagree with? If there are any areas that you think will particularly affect your business, let us know at firstname.lastname@example.org.
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