January 2014Business Trends

Top Business Trends for 2014

Top Trends for 2014

From risk management to knowledge management, from the nature of success to strengthening boards, 2014 will bring changes to the ways individual leaders and their organizations do business. Wharton faculty offer their insights on what to watch in the new year. Look for more trends in our next issue, with a focus on Marketing.

Changing the Meaning of Success

Adam Grant, Wharton management professor and author of the best-selling Give and Take, says, “The nature and meaning of success is shifting in organizations. We used to evaluate success on the basis of individual achievement, but increasingly it is about how your achievements affect the success of others. Companies are looking at the contributions you make to other people — what kind of impact will you have beyond your core job description? The employees who are getting hired and promoted are those who enhance the success of those they work with and for.”

Grant’s book identifies three styles of interacting with others and argues that the ways in which we interact are increasingly drivers of success (or failure). Takers work to get as much as possible from others, Matchers strive to trade evenly, and Givers contribute to others without expecting anything in return. “On the selection side,” says Grant, “many people assume that if you want a culture of givers, you have to hire more givers. But actually it’s more important to screen out the takers, weeding out those who are relentlessly and competitively focused only on their individual results. It’s easier to shift the rest of the culture without the takers causing paranoia.”

Greater Emphasis on Risk Management

Wharton finance professor Chris Ittner says 2014 will see more organizations taking a holistic approach to risk management. “Ever since the financial crisis, there have been widespread calls for companies to implement enterprise systems that consider risk management in their decision-making. The old siloed approach that centered on compliance is giving way to a comprehensive view of how risk is managed, what an organization’s appetite for risk is, and even how to take risk into account in incentive contracts. When it is done well, risk management can be a strategic competitive strength, but it is an area that’s still in its infancy. We’ll see more companies placing an emphasis on risk management in 2014, so expect best practices to evolve as more companies develop risk management systems.”

Stronger Boards

As the U.S. CEO turnover reached its highest level in five years, Wharton management professor and faculty co-director of The Leadership Journey: Reinvigorate Your Leadership Michael Useem points to a trend that could help guide the executive succession process and ensure that a viable succession plan is in place for the future. “Governing boards are becoming stronger, more independent, better led — and more effective in partnering with management and in leading the company — and they are also seeing more active investors in the boardroom.”

The Strategic Successor to Knowledge Management

“Everyone is currently talking about big data,” says Martin Ihrig, Learning Director of Wharton’s Strategic Management of Knowledge Assets. “But what are they doing with that data? Many companies are collecting it, but struggle to convert it into strategic insights. And mostly they look outside of the company and fail to analyze their internal knowledge assets.”

Ihrig, who investigated the evolution and mapping of knowledge in the multibillion dollar ATLAS experiment at CERN, explains that leaders need to develop a strategic perspective on internal and external knowledge assets that are important for their organization. “Right now there is a disconnect between knowledge and strategy. Everyone knows there is competitive advantage in deeply understanding their knowledge, but very few decision makers know how to strategically harness it.” And as the reliance on knowledge resources to create competitive advantage grows, not just from your patents and copyrights, but also from the tacit knowledge and experience of key employees, it is becoming clear that simple ‘knowledge management’ is not the answer. “The problem is that you can’t “capture” all of your knowledge. And even if you could, you would end up with cognitive overload. You have to be strategic about it. Start thinking about what knowledge is critical in your company, where it is, and what impact it has or could have on your bottom line. You don’t need to capture everything. Only look at what enables competitive success.”