3. Social inequality
The world is getting richer, but inequality across the globe is on the rise – currently at an historic high in fact. Of the world’s population, 1% now controls more than 50% of the planet’s wealth. The pay gap between corporate executives and employees is also widening. Peter Drucker, the late management thinker, once warned that a CEO-to-worker pay ratio of more than 20 to 1 would “increase employee resentment and decrease morale.” In some US organizations, as of 2014, that ratio was 350 to 1.
This has not gone unnoticed, with anger at this inequality being expressed at ballot boxes around the world. “The economic inequality message has been clear,” says Beth Brooke-Marchiniak, Global Vice-Chair – Public Policy, EY. “In the aftermath of 2016, we have societies pulling apart, finding it hard to resist trends toward nationalism and a rejection of those who are different. We need to listen. We need to act.”
4. Diminishing brand control, rising social media
In recent years businesses have lost some control over their brands to customers and the wider public. The public has proven adept at harnessing social media to propagate their influence and opinions on unfulfilled brand promises around the world in seconds – faster and more effectively than any news organization could. The ease with which opinions can be expressed makes creating a positive first impression more important than ever.
5. Demand for longer-term thinking
The public is now asking for more from companies than a commitment to short-term profitability. A growing number believe that companies have an obligation to address long-term global environmental and social challenges – the so-called Triple Bottom Line. Executives are also trying to consider long-term consequences despite many short-term pressures: one report indicated that 40% of CEOs surveyed said short-term shareholders constitute the greatest threat to corporate values. After all, says Weinberger, “much of a company’s actual value is tied into things like brand, talent, and intellectual capital – the assets that are crucial to creating value in both the short and long term.”
6. Digitization – threats and opportunities
It took over a decade for mobile broadband to reach two billion people. By 2021 that number could almost quadruple to 7.7 billion. This instantaneous interconnectedness between stakeholders and the increase of powerful, real-time data analysis will create new opportunities for businesses to know and serve customers better. But it will also bring in new ways for customers to spot any gaps between a company’s image and its actions in reality. “As data and digital technology affect every sector, businesses are under tremendous pressure to innovate, says David Jensen, Global Disruptive Innovation and EY wavespace (TM) Leader, EY. “Predicting the future is impossible, but when an organization can articulate and activate a higher purpose it has a better opportunity to shape the future of itself and its marketplace.”
Combined, these six forces mean that many employees, customers, investors, communities and other stakeholders are asking profound questions about the structure of society and the role of the corporation within it. And while change is a perpetual feature of life and business, technology and science are pushing the pace and extent of change like never before.
Instead, grasping the core reason an organization’s existence and seeing how that sits within the wider world can be a more constructive way to address disruption.