The most important actionable item on business minds today should be strategy. Unless you are willing to ride the wave and be consumed, all businesses and organizations have to be worried about strategy. Only a handful of the top 50 North American companies listed 10 years ago are still operating today. You can expect a series of articles on strategy, beginning with this first one on why we need to strategize.  

By the year 2012, North America will see the largest change in human resources that has occurred since the Second World War. The large exodus of baby boomers into retirement will force more companies toward automation, will empty out more small towns, will place more constraints on service organizations (like health and educational institutions). Unless we are careful, we will lose more critical knowledge as a result of losing so much experience. This is why so many companies and organizations are starting “knowledge management systems”, the topic of another future article.

The Kyoto protocol, the growing population in larger centers, the increased use of electrical energy will affect our industries. It will force more innovation to combat increasing energy prices. Ontario will be especially sensitive to this problem because its energy costs are already high compared to competing jurisdictions.

The international consolidation of industries and their specialization will aggregate more plants at the local level. Already, we have seen the effect in our forestry industry, with plant shutdowns and temporary layoffs. Consolidation usually make it harder for smaller operators to survive. If they are trying to compete against the giants, they usually lose out because they do not have the economies of scale. If they are suppliers to the giants, they are often stamped out by centralized purchasing. It will become harder for smaller operators to compete… already, large box stores like WalMart and Home Depot have forced a 25% reduction in costs to their suppliers in the last few years, and their presence on the market has precipitated the downfall of many small operators. And we can expect more consolidation and box effects on other types of goods and services… no one is really safe.

Another factor affecting all businesses and organizations is global commerce. Global commerce is central to even the smallest community’s job prospects. Already, U.S. citizens are trying to convince its government to repatriate the jobs that are sent to under-developed or off-shore countries. A losing battle given that companies have a responsibility to shareholders to continually decrease costs, increase productivity, and improve the bottom line.  

The fact that goods and services are being moved in cyberspace affects economies and your strategy as well. Technology will determine the type and form of work now and in the future. If we cannot compete on the production of goods, and if jobs are being replaced by automation, then we only have one asset left: knowledge. In the past, we used physical resources, tax breaks, low wages, or location assets to attract jobs.   Now, we are trying to attract medical professionals, consultants, designers, researchers to our towns because they are a more stable long-term resource. These are our knowledge workers, who can offer their services to the world. Companies can contract out knowledge workers from anywhere in the world. This provides an opportunity for communities with a rich quality of life to attract and maintain knowledge workers. We are entering into an age of “electronic migration” and workers will be able to stay home and work for companies located in other districts, provinces, or countries.

As businesses and organizations, we need to strategize in view of what is happening in the outside world. We also need to strategize in view of our internal strengths and goals. The next articles will explain how to develop a strategy.