CEO Check-list for 2012 | The Return of Big Projects, the Talent Pool, and – again – the Economy

I was reading one of the social blogs earlier today and was struck by the plainness of one opinion of the past year: “2011 was stupid, it sucked and stupid things happened.” One might think that such a chagrined outlook is not what we necessarily write here, but the essence is pretty frank.  2011 was – again – the year things were going to get jump-started and in oh-so-many-ways little materialized.  Residential housing stayed in the trough and the commercial real estate market was so bad that everyone has been ignoring it like the poor little friend-of-a-cousin-whom-you-see-every-five-years-at-Thanksgivingtime who ate too much and complained after the holiday meal.  Then there was that little tsunami episode in Japan where we all learned just how intricate the manufacturing supply chain really was for eight months after the devastation occurred.  As the year drew to a close we found out how important cyber warfare was – and how intrusive it has been all along – when the US Chamber of Commerce disclosed Chinese hackers had infiltrated its systems for over one year before detection.

Fortunately there are some bright spots.  In some areas job growth, buoyed by a resurgence in manufacturing as well as diversification and small business growth, made big head ways.  Earlier this week the Detroit Free Press reported that for the first time since the new millennium there will be positive job growth for the year in the State of Michigan.  Airplanes got bigger – way bigger - as the new massive Boeing Dreamliner 787 entered flight test and Airbus 380 continued deliveries.  We retired the space shuttle while at the same time opened the door for companies like Virgin Galactic to privatize human space travel on a recreational basis.  Apple had another winner – two actually – with its iPhone 4 and 4Gs models, putting pressure on RIM and Motorola and other mobile technology makers to step up or shut up in the exploding device market.  Software maker SAP made a big splash with its high analytic appliance (HANA) platform, showing that – yes, Virginia – you really can run all that batch computing real-time and allow for in-memory and dynamic simulations of critical business information.  Avionics came to the forefront when a coveted stealth drone was captured by Iranian authorities, starting the clock as to how quickly the Iranians, North Koreans, Chinese and even our new World Trade Organization partners – the Russians – can reverse engineer the information contained in that snappy looking fly-by-wire vehicle.

So let’s have a look at what we expected to happen in 2011 and what we do expect to happen in 2012…

2011:

#5 – It’s still the economy, stupid. Totally got this one.

Manufacturing is back, but for how long? (Photo from Detroit Free Press)

We are and continue to wait for the convergence of key indicators – particularly consistent sector growth in manufacturing and services – along with a robust savings rate upwards of 10% to really spark the economy.  While most of the conversation is still focused around how consumers spend their money, history has shown that the most economically sustainable recoveries occur when there is adequate savings and reserves.  After years of low – and at times even negative - savings levels, we seem to be plateauing around 6%.  Savings, according to the Bureau of Economic Activity (BEA), includes funds not used in the purchase or investment accounts.

#4 – Sustainability isn’t a fad.  You can either get on the bus now or have it run over you later.  While this is true, mainstream business has yet to catch on.

Most of the work in private business that we see is self-directed at least in the US.  While this is good – I believe it is better for a company to want to change behavior rather than feel it must change behavior (a la compliance and regulations) - we are still waiting for the spark to pick up sustainability beyond more than friendly “green teams” and cost-reduction actions in large publicly-traded companies and private enterprises.  See more on this bending trend, below.

#3 – If it ain’t broke, don’t fix it.  If you don’t have it, break something to make it.  Definitely, as there were some really big winners in 2011.

Business Leaders could learn a lot from dead teenagers. (Photo from FX Network)

I mentioned the mobility game-changers that Apple brought, relegating RIM to third place (depending how you measure) from its once undeniable thrown in the mobile device space.  Small businesses led a lot of innovation this year, and big companies like Volkswagen – now making a pile of vehicles in the US – significantly altered their business models to buy market share in their respective industries.  Even in the motion picture and television industry, this quirky show about ghosts – characters who are not even living according to the script – captured Gen-Z and Millennials in a big way by creating a television series hybrid with American Horror Story.  Talk about out of the box thinking!  Business people need to get into the same disruptive thinking in manufacturing and technology segments.  Learn from dead teenagers how to market to living ones.  One big trend is the continuing decline of email use among Millennials and Gen-Zers.  Social media platforms will continue to be more important for basic electronic communications as well as targeted marketing.

#2 – Don’t just change for change sake – have a plan, stick to it, drive to results.  Crap shoot, some did, many didn’t.

Many companies had excellent plans and great analytics for measuring the performance of those plans going into 2011.  Then the tsunami hit and everything went out the window along with the topical black paint for automotive shops (can you say 10-month back order?)  Risk management has come to the forefront and strategy formulation and organization design are just now re-emerging as approaches that are back on the mind of CEOs particularly in the mid-market.

#1 – Welcome the Mobile Society and Sustainable Mobile Computing Duh, this really was a no-brainer and will be for 2012 as well.

After years of social media experimentation, 2011 showed signs that we are going to get serious - really serious - about mobile computing and make big bets in this arena.  Several aspects to consider.  First in mature markets, the advent of 4G infrastructure and near-field computing (NFC) will eventually make money and currency as we know it obsolete.  Not next year, or maybe the year after, but it will happen.  Smart phones will come with personalized SIM cards which will link to our bank accounts, creating electronic wallets that not only will allow wireless transactions from the device but will also recommend based on buying preferences where the products and services most desired by the consumer might be found.  We saw this in 2011 at an application level, particularly with merchants like Starbucks whose smart phone apps were deadly accurate and screaming fast. Second in developing markets, the mobile device will need to operate like a laptop or home office computer to drive commerce.  Applications with a thin “cloud computing” layer and footprint will enable peer-to-peer transactions so that commerce can exist without a large infrastructure.  Finally, the move to sustainable mobility – such as the Our Mobile Generation program – will create ways in which highly toxic mobile devices of today can be made and used on a more environmentally friendly manner.

So what about 2012?  Some thoughts, ideas and trend-benders:

#5 – The Talent Pool will Continue to Drain.

The talent pool will continue to drain in 2012, particularly in the US market.

While hiring has picked up in many markets, employment stagflation – and along with that the talent development of many decision makers including entry-level management – will create issues.   According to human capital consultants and futurists the Herman Group, employment in the US market will remain at near or even higher than 7.5% in the US market.  Meaning that many positions that would normally be added to back office functions in particular – purchasing, human resources, recruiting, supply chain management – will be working with staff that are over-taxed and in many cases under-qualified to handle workload, position responsibilities, or both.  Working with large corporations will require technology solutions to be explained v-e-r-y s-l-o-w-l-y in the US market in particular in order for very busy, over-burdened and in some cases poorly trained staff to take advantage of business benefits.  Until hiring picks up, for mainstream manufacturing and service industries mediocrity will reign supreme for another year.

#4 – It’s STILL the Economy, Stupid.

Until the magic numbers converge, unemployment will remain high, workers over-tasked, and $2 trillion in capital will remain on the sidelines in the US market.  There is no guarantee that the Obama administration will play nice with the US Chamber and other business groups, resorting to politics and regulation versus business cooperation. However there is also no guarantee that we should expect anything different after the 2012 election.  At the time of this writing the Republicans can’t seem to aim their sites higher than their own foot after stumbling with the employment tax relief vote.  All this means that the economy moves up a notch on this year’s CEO list.  Pray for no natural disasters in 2012 and that the Mayans just ran out of room on their calendar.

#3 – Technology Required – You have it or you don’t.

Don't bother me if you can't cloud...

Second generation cloud computing, where you can combine both on-premises and network based solutions, is now reality.  It isn’t an either-or kind of thing and companies are realizing it is less expensive to have specific functions – such as purchasing or human capital management – or for operations of full subsidiaries to be managed in the cloud.  This can in some ways address the talent pool issues (see #5 above) in some of these functions by automating key processes such as employee benefit self service, purchasing analysis, employee performance management, and some logistics functions.  Security issues have been addressed and now the real hurdle is cultural.  Large companies are looking at software providers expecting these “check-list items” will be provided as options or at least on the future product roadmap.  Even product companies, such as home appliance and automotive  manufacturers, have mobile apps to “check-in” on the performance or maintenance cycles.  Need to start and unlock the car for your husband who locked his keys in the glove box from your smart phone? No problem.  Crazier stuff than that will become not just a fad option, consumers will demand it.

#2 – Innovative companies will make bets, take risks, and claim market share.

I see it in the corporate board rooms and with owners of small to mid-sized companies.  Growth will be a top priority in 2012.  Which will be nice, since that word feel off the radar screen for many executives over the past three years.  In case you missed it the manufacturing recovery will enter its third year according to trends from the Institute of Supply Management (ISM) in 2012.  Mergers and acquisitions will pick up as companies blend both organic and non-organic growth strategies.  I am looking forward to my prediction becoming a reality on this one in particular.

#1 – Big Projects are Back, and they must be Mobile

You knew I had to include mobility in this fray somewhere and here it is.  But the caveat is that mobility at the enterprise level will be a major workstream of larger systems transformation projects.  We saw this trend emerge with our crowd source poll earlier in the year regarding the relative marginal costs compared to the significant increase in project approval rates for systems transformation efforts.  Yes mobility is big.  Really BIG. Mobility also needs to be paid for now that it is proven in the enterprise space.  Doing this as a part of a resurgence in large project activity helps to spread expenses and increases the “cool factor” of each project.

Best to everyone for a prosperous and healthy new year!

For more information on scheduling an initial discovery session or for public speaking events please forward your inquiry via email to info@newportconsgroup.com or visit our firm website.

About these ads

Leave a comment

Filed under Audit and Oversight, Change Management and Leadership, Communication Planning, Compliance, Enterprise Performance Management, Financial Management, Information Technology, Innovation, Mergers and Acquisitions, Mobile Society, Operations, Other, Procurement, Program Management, Risk Management, Strategy, Supply Chain Management, Sustainability, Technology

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s