Foresight - for firms serious about getting ahead

The dot.boom of 2000 and the subsequent debt-driven growth until 2008 camouflaged a great deal of inefficient practices and resources. The subsequent bust will bring back a sense of normality to the market through several years of cost-cutting and greater focus on customers, productivity, resource utilisation, and profit.

Up until 2003, the concept of ‘globalisation’ had centred on the internet, dealing with customers and suppliers abroad, or setting up offices and plants in other countries. We call this the first age of globalisation.

From 2003 to about 2010 we will experience the second age. This age is characterised by resource arbitrage - exploiting cost differentials in terms of labour, materials, and skills. Companies that survived primarily on cost-driven strategies in the past will be under greatest threat. Businesses will begin to recognise the potential of a more coordinated value chain and synergies available from leveraging scale, brands, and alliances. Innovation will become an even more critical key driver for sustainable advantage!

On a global level, India and China will compete more aggressively for foreign capital resulting in continued downward pressure on developed country CPI’s. A longer-term effect is the increased value-add services imported from these highly-skilled, low-cost countries. After you have outsourced commodity-type, low-cost, non-core services the question remains, ‘How else can we compete?’.

The third age (about 2010 onwards) will be the age of coordination. Companies that previously embraced innovation by leveraging the complementary strengths of their direct and indirect value chain, will achieve sustained high growth and profitability because of their access to, and reliance on the ‘open network’ of businesses. These firms will share a common belief focused around customers and value chain innovation. The synergies created from this network will become evident by the value captured from creating new trends, adopting new or existing technologies, and foreseeing consumer preferences before consumers do!