Global businesses should expect tough times in 2012

Published:  10 Jan at 9 AM

As at every turn of the year, last week’s celebrations have been dampened down by prophets of doom foretelling everything from global economic meltdown to geopolitical tensions sparking Armageddon. This year, the horror stories are being spiced up by frequent references to the controversial Mayan calendar, interpreted by some as predicting the end of the world on 21 December 2012.

However, those who prefer to base their ruminations on last year’s continuing economic and social upheavals are arriving at a different, no less controversial conclusion – simply that the way businesses interact with consumers is overdue for a major, disruptive transformation in that the familiarity to business owners of the present system may well be swept away. According to Unilever’s CEO, Paul Polman, capitalism as we know it is on its last legs, becoming more unworkable by the day due to the increasing income disparity common in third world countries finally impacting the developed world. Mr Polman argues consumers are now demanding a major change in methods of doing business, with Unilever setting an interesting example with their Sustainable Living Plan involving real commitments to societies within which the company operates.

Along with the rise of social networking has come a rise in not only consumer awareness, but in the ability of huge numbers of consumers to praise or condemn, holding companies who overstep the mark accountable in a public manner never possible before. The old adage of ‘a happy customer tells a friend; an unhappy customer tells ten’ still applies, but nowadays the same unhappy customer can reach millions with a click of the mouse. The advent of the internet-savvy customer has the power to influence everything from products, prices and services to company policy on creating not just a healthy balance sheet but a better future. A recent Harvard Business Review of capitalism included the suggestion that there are ‘no inherent tensions between creating value and serving the wider public interest as well as that of the environment.

As a result, companies who meaningfully address the interdependency between society and wealth creation are likely to have a comparatively easy ride in 2012, while those who continue in the old ways may miss the boat now driven by their more astute rivals. Bankruptcies due to outdated business models and inflexible technologies, including in the retail banking sector, may be on the cards by the time the world is celebrating the start of 2013.