The agenda at the World Economic Forum in Davos this week is apt given the social, political and business climate we are in today.
While governments continue to come under pressure to address immediate issues related to debt, stability, and unemployment, business communities are much better placed to manage the slowdown. For nearly four years, ‘austerity’ and ‘cost-cutting’ have been high on the C-level agenda. However, going forward, these measures will not attain growth in the long-term. It is time to seek new avenues for growth through the transformation of current business models.
Creating a business for tomorrow
The World Economic Forum Annual General Meeting will focus on ‘The Great Transformation: Shaping New Models’. Debate around the global economic crisis will be rife, but essentially the forum will be a platform to create conversation on how transformation will help to inject life back into economies, and ultimately the organisations that underpin them. This is an approach that European organisations need to take; they must transform their business models, and essentially their infrastructure and technology platforms, to survive and thrive.
Investment goes hand-in-hand with transformation and although making investments will not be easy in the current environment, organisations must brave the storm and invest. For example, technology not only reduces costs, but it also helps to innovate new models for business, which in turn helps to achieve sustainability and growth, and this contributes towards reigniting the economy. We have seen how the internet, global connectivity and information technology has shaped new business models for the services industry over the last five years.
Sustainability - a third industrial revolution
In times of austerity it is easy to sideline the sustainability agenda but by reviewing the carbon intensity of resources, forming social contracts and investing in green innovation, organisations can plan for the long term. Organisations should use products and services that consume fewer resources and actively engage with employees and society to reduce disparity. By investing in the green initiative, organisations will be able to better manage costs and make employees more socially and economically aware.
Reducing the carbon footprint is not easy, but European businesses must invest in green technology that enables them to be more energy efficient and rely less on natural resources. Over the next 20 to 30 years, Europe has some specific green regulatory targets to meet and the uptake in the Smart Grid, which can generate energy through renewable resources, will be critical in achieving these goals. The investment in renewable energy will also create new employment opportunities so it is in the interest of organisations to support the initiative by utilising greener technology.
In short, we are heading towards a green revolution, whereby environmentally friendly technology will deliver sustainability, growth and the creation of new jobs. The political and social agenda aside, it makes commercial sense to invest in technology, go green and become carbon neutral.
Open relationships must emerge
A government’s immediate reaction to protect a flailing economy is to introduce new trade barriers, but in the long-term this can be detrimental to commercial performance. In my view, the immediate need is for governments to restore confidence, which will encourage stability. An open trading market, between Europe and emerging markets is vital to increase trade and ensure the mobilisation of talent. Additionally, BRIC countries are prospering so not only can these respective nations inject cash into troubled European sovereign bonds, but they can also help to alleviate the pressure of financial stress that many organisations are under due to stagnation and rising costs. In return, European countries can offer their past experiences so the BRIC countries don’t over consume like the West.
European businesses can aid their trading woes by tapping into the economic prosperity of BRIC countries and using emerging countries talent pools and innovation hubs. This will empower developing countries to improve their living standards, which will enable them to grow and help contribute to the rest of the world.
Technology has created a globalised world that enables businesses to trade in a seamless transparent environment, and by utilising this opportunity, European organisations can evolve their relationship with emerging countries and leverage technology to transform their business models.
BG Srinivas, Infosys Member of the Board, Head of Europe