We have to try to engage proactively with a changing business world, no matter how impossible it seems to predict what is coming.
‘It’s difficult to make predictions – especially about the future,’ as an old Danish proverb observes.
The saying – sometimes attributed to physicist Niels Bohr – makes perfect sense. Predictions are hostages to fortune, and it’s not difficult to think of a number of well-known forecasts that turned out to be embarrassingly wide of the mark.
Thomas Watson, then president of IBM, wrote in 1943 that he saw a world market for ‘maybe five computers’. Steve Ballmer, then the chief executive of Microsoft, said in 2007 that there was ‘no chance’ of the newly launched iPhone gaining any significant market share. Telephones were just a toy that would never catch on, wrote the president of Western Union, William Orton, in 1876, when inventor Alexander Graham Bell offered to sell him the patent.
And so on, and so on.
Nevertheless, not everyone has the luxury of being able to avoid being held to account. Especially those of us who run businesses or supply chains.
For us, we have to make predictions: it’s our job. And right now, we’re facing a choice – disrupt or be disrupted. Here’s why.
Why do we need to make future predictions?
A business or supply chain that is ill-prepared for the future is a business or supply chain that may not have much of a future.
In the current business environment, we all need to make predictions about the future. But even so, making predictions about disruptive trends is excruciatingly difficult.
While it’s easy to laugh at how wrong predictions can be, at the time those predictions may well have appeared to be sober, hard-nosed assessments.
All of which is worth bearing in mind as businesses and supply chains around the world begin figuring out what to do about 2 key disruptive trends that are competing for our attention.
1. The sustainability agenda
From the fuel that powers our trucks, ships, trains, and aircraft, to the paper and plastics that make up our packaging, logistics is very much in the crosshairs of sustainability activists’ sights.
We all need to have a strong sustainability agenda. Ignoring the issue is not an option. But right now it’s difficult to see what options we have.
A few years ago, the focus was on ‘peak oil’ and running out of the stuff. Now investors are alarmed at the prospect of so-called ‘stranded energy assets’ – reserves of fossil fuels that may never be extracted because of their impact on climate change.
2. Geopolitical uncertainty and the perils of a hyperconnected world
After sustainability, the next disruption that will affect all of us is ongoing geopolitical uncertainty. President Trump’s trade wars. Brexit. China and its ‘Belt and Road’ strategy. Seemingly perennial Middle East tensions. These are not comfortable times in which to be determining supply-chain strategies.
Nor is it solely geopolitical uncertainty that impacts supply chains. From the Japanese earthquake and tsunami of 2011 to the more recent coronavirus outbreak, again and again we see what an interconnected world we live in.
Within days, an event on the other side of the world can disrupt supply chains thousands of miles away. Supposedly resilient, they turn out to be more fragile than anyone imagined.
Roll it all together, and it is increasingly difficult to avoid the suspicion that present approaches to supply chain management aren’t as effective as we practitioners fondly imagine.
What can we do?
In short, we need something else – not least a change of mindset. Because transformation is only possible when we are willing and able to let go of our old patterns, old models – and old concepts of what constitutes supply chain management.
Put another way, the biggest risk that businesses may face today is the risk of doing nothing at all. It is not an exaggeration to say that businesses can choose to disrupt, or to be disrupted.
As I point out to my students, Uber is the world’s biggest taxi company, but doesn’t own a single taxi cab. Airbnb and Booking.com are the world’s largest hoteliers, but don’t possess any hotels. And after being in business for a quarter of a century, Amazon – the world’s biggest bookseller – is only now experimenting with physical book shops.
It’s time for something more radical
Even some of the world’s leading thinkers on business and supply chains believe we need something radical, and we need it now.
In late 2018, for instance, influential management thinker John Elkington took to the pages of the Harvard Business Review to officially ‘recall’ – i.e. take back – a concept that he had first launched 25 years ago: the Triple Bottom Line.
Simply put, he argued, the Triple Bottom Line was no longer enough. Something else was needed. Something bolder.
To those in the know, Elkington’s admission was startling. The Triple Bottom Line had an enormous impact on businesses’ and supply chains’ approach to corporate and social responsibility. It replaced a single-minded focus on profitability with a broader focus on social, environmental and economic impact – the Triple Bottom Line.
There’s no doubt that it’s made a big difference. But it isn’t enough, Elkington acknowledged. Too many businesses see it as a trade-off mechanism, rather than as an absolute test.
Something else is required if businesses are to really ‘shift the needle’. Right now, though, we don’t yet know what that something else could be.
But one thing seems certain: despite Donald Trump’s dismissive remarks at Davos this year, Extinction Rebellion and Greta Thunberg won’t let up on the pressure to find it.
Supply chains need a radical rethink, as well
Another concept that may be ripe for re-evaluation is the very notion of the supply chain. Look at many real-world supply chains, and it is difficult to escape the conclusion that ‘chain’ is too mechanistic a description of fulfilment processes – too linear, too unidirectional, too evocative of inflexible conveyor belts.
In industry after industry, real life doesn’t work like that any more, if indeed it ever did.
What can we replace the term ‘supply chain’ with? I rather like the suggestion that ‘supply web’ would be a better term.
It is closer to what many of us deal with in practice. It brings with it values of flexibility and resilience, as well as facilitating two-way flows and multiple sourcing connections.
Does such relabelling help? Shakespeare, after all, aptly observed that a rose by any other name would smell as sweet.
But with all due to respect to the Bard, I disagree. We need that mindset change. We need to let go of our old patterns and old models – and embrace new thinking.
As practitioners, ‘supply chains’ imprison our thinking, locking us into paradigms that constrain us. ‘Supply webs’ open us up to new possibilities, new paradigms and potentially new and different processes.
And with the challenges the world faces, those new possibilities, paradigms and processes have never been more needed.
Disrupt – or be disrupted. Be an Uber, Airbnb or an Amazon. And not a moribund traditionalist.