The world of business continues to evolve rapidly and companies unaware of the emerging business trends are often caught off-guard. Rather than focusing on their business, managers end up spending precious time and resources on fire-fighting and reacting to these changes.
MBA Crystal Ball requested the leading subject matter experts from the Tepper School of Business (Carnegie Mellon University) to do some crystal ball gazing.
We asked them about the trends in their respective fields that will gain prominence globally in the next five years and what companies can do to be prepared.
How the business world will change in the next 5 years
Trends in Organizational Behavior
Anita Williams Woolley, Associate Professor of Organizational Behavior and Theory
As in many fields, data analytics and artificial intelligence are already big and going to get bigger in organizational behavior. Organizations are getting more savvy about using data to improve hiring, performance management, and coordination.
Artificial intelligence can be used to not only augment the quality of what individual workers are doing, but also to improve the efficiency with which they work by better coordinating different inputs.
Smart companies are not only hiring talent in these areas but also partnering with universities to get access to talent and an early look at new developments.
Trends in Marketing Strategy
Timothy Derdenger, Associate Professor of Marketing and Strategy
The field of high tech marketing strategy is ever changing as a result of consumer preferences changing. Firms are constantly forecasting preferences in order to generate the next “hit” product or service.
These forecasts are becoming ever more precise given the vast amount of data that firms collect, via online shopping behavior, browser behavior and through always listening personal assistants (Google Assistant, Alexa, Siri, and Cortana).
Unlike some market research firms that project exponential growth in these devices/services, I take a contrarian view and believe the market place will see a shift in privacy preferences, with an increase demand for greater anonymity due to consumers becoming more attuned to just how much personal information technology firms have collected.
How should firms prepare for the future loss of personalized data? By leveraging its existing individual level data to generate new highly accurate predictive models of consumer behavior with less granular, more population level sales data. Those who prepare now will reap the rewards tomorrow.
The second trend is the widespread adoption of AI, ML and robotics in traditional industries. These technologies will be used to disrupt the market place as entrepreneurs begin to recognize how technology can be used to lower costs, create greater efficiencies in production, and add more value to the market’s existing product/service offerings.
Firms in these traditional markets should be put on notice, disruption is coming. How do existing traditional non-technology focused firms prepare? Simple, innovate. Beat the entrepreneurs to the “innovation table.” The rewards will be worthwhile.
Trends in Finance
Chester Spatt, Pamela R. and Kenneth B. Dunn Professor of Finance
The recently enacted changes to the United States corporate income tax are likely to lead to profound changes to the financial structure and organization of enterprises. For example, these changes will lead to repatriation of much of the overseas profits that U.S. firms currently hold abroad in order to defer U.S. income tax liabilities.
As an example, Apple has announced that it plans to repatriate much of the ¼ trillion dollars in cash that is currently held in its overseas units. For many reasons we anticipate that corporate capital structures will be simpler under the new law (e.g., importance of foreign subsidiaries would diminish) and the use of debt would be greatly diminished.
The repatriation of funds to the U.S. would diminish greatly the need for global firms to borrow to finance U.S. activities. Furthermore, the statute imposes new restrictions on deductible debt in the U.S. and the incentives for tax-deductible debt finance are diminished considerably due to the reduction in the corporate income tax rate from 35% to 21%.
Compensation practices also are likely to evolve. An important statutory provision has been a restriction to one million dollars annually for tax deductible non-contingent compensation for executives (encouraging contingent compensation). Under the new tax law the companies covered under this limitation are broader and the limit on deductible compensation will be extended to more forms of compensation (and the value of tax deductions will be reduced).
Of course, it is important for companies and their tax advisors to review all elements of a company’s situation to evaluate the consequences of the new tax rules and consider potential changes in organization and financial structure.
Trends in Operations Management
Sridhar Tayur, Ford Distinguished Research Chair, Professor of Operations Management
- Supply Chain Management
- Healthcare Delivery
The use of blockchain in logistics management and in fighting counterfeits.
The increased use of data (from wearable devices or genetic/ bio-chemistry information) and custom developed advanced AI/ML methods to provide, respectively, personalized care or targeted individualized therapies.
The widespread imbedding of standard ML techniques (working off sensor data for industrial applications) into operational software (some delivered through VR/AR platforms).
What can companies do to be prepared for it?
- Be part of the innovation eco-system consisting of startups and venture capital by providing access for pilots/field testing (in addition to potentially co-investing).
- Build a culture that can embrace innovation in a disciplined manner through education, training and controlled field testing of new business models, processes and technologies.
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