So where is the next round of business growth coming from?

In this climate of disruption, a business can no longer sit in cruise control, tweaking their business model from year to year. The pillars of the old economy, pre the internet, have been toppled or have been shaken to their core. Markets are changing shape and game changing business models are side swiping blind sighted competitors.

Despite the call for growth and the need for bold innovation, the commercial world is still in tweaking mode.

In the downtime markets, like the US, commercial performance is coming from head count reductions and share buybacks rather than innovation. In Australia, we are riding the wave of demand for steel and electricity in China and India, fueling massive engineering construction and a flow on upswing in consumer spending. Take mining out of the equation and then ask yourself how well Australia is creating value, are we a clever nation or a nation of jackpot millionaires?

It is important in this global downtime, where we are facing disruption in key market sectors and resource boom punch drunk markets, that we return to the true drivers of market opportunity. Today, on a Harvard Blog post, I was confronted by the words of Peter Drucker, which got me thinking about the next wave of business growth to lift us out of this global economic funk.

In the words of Peter Drucker:

“Every singly social and global issue of our day is a business opportunity in disguise. The proper social responsibility of business is to tame the dragon – that is, to turn a social problem into economic opportunity and economic benefit, into productive capacity, into human competence, into well-paid jobs, and into wealth.” 

And here lies the challenge for the marketing machines in business, charged with making the Peter Drucker insight, a commercial reality.

The challenge as identified through Hearts and Minds brand research for our clients is as follows:

Only those social opportunities, that can be linked back to the personal needs of individual consumers, can be met by the marketplace, very few products and services have been sold to individuals purely on the basis of some greater social good…only government policy can open these economic opportunities to a nation.

Think energy, health, aging populations, communication, human friendly natural environments and the most basic of human needs: food, clothing and shelter….these are Drucker’s social issues, so how can we convert these into the next round of growth?

All of these social issues and the unmet customer needs associated with them, will give rise to the next wave of innovation to deliver commercial growth. When we consider the reality of meeting these social needs, they are more about changes in social policy and government backed national infrastructure, than a simple proposition between an individual and a brand. What’s more, it takes a progressive government and an economically educated voting population to position a single nation to leverage these opportunities. Little wonder analysts point to poor governance to explain the failure of the European nations.

Michael Jacobides makes this very point in his article, Why Financial Discipline won’t fix Europe, July 30, 2012, where he observes that it was poor governance that brought on the demise of Greece, Spain and Italy. He goes on to say the Greeks are the hardest working people in all Europe, with the Dutch and German the least. It is not the lack of  human effort that broke these economies, but a woeful lack of good governance.

if we look closely, we see that the real problem for Greeks — at least, those with jobs — is not that they’re work-shy. It’s their monstrous public sector, which is inefficient, often corrupt, and prone to meddling with the allocation of productive effort in the private sector. In other words, Greece’s problems are fundamentally structural. The story of Greece is the story of a failure in governance. …..Spain’s massive banking mess with the Cajas de Ahorros is due to local politicians’ influence on banks, and their iniquitous links to property developers. Italy, too, suffers from nepotism, political clientelism and corruption. It is precisely this endemic southern European disease (most acute in Greece) that the EU can fix.

So where is the next round of business growth coming from?

I would suggest two key sources either:

market driven in the form of brilliantly disruptive business models

or

breakthrough government policy, which puts in place the conditions to drive commercial initiatives to deliver great social outcomes.

 

Louise Kelly

Managing Director

Hearts and Minds

www.heartsandminds.com.au

Thought Leaders Circle

www.thoughtleaderscircle.com

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