Wharton@Work

January 2015 | Business Trends

Top Business Trends for 2015

Want to stay ahead in 2015? Here are some of the ideas and trends our experts at Wharton are sharing with executives in their classrooms.

Leadership Under VUCA

Todd Henshaw, Director of Wharton’s Executive Leadership Programs, works with about 80 companies each year. Lately, he’s been hearing the military acronym VUCA (which stands for Volatility, Uncertainty, Complexity, and Ambiguity) frequently. It’s a term that is familiar to the retired US Army Lt. Colonel and former West Point Leadership Professor. “It describes the chaotic environment we also refer to as the Fog of War, and it correlates well to how uncertain and complex the business environment has become.”

What does VUCA look like to leaders in organizations? Henshaw, who teaches in Creating and Leading High-Performing Teams and High-Potential Leaders: Accelerating Your Impact, describes three important elements: M&A activity, reorganizations, and leadership transitions. “Mergers and acquisitions are occurring at a much higher rate, especially since the economy has strengthened. Some occur across international boundaries, which requires leading across cultures. Major restructuring is now happening every few years. Companies are moving people around, changing functions, and generally causing major upheavals, and even chaos, much more frequently. They are also transitioning and relocating leaders more frequently, often from outside the organization. It causes stress on the new leader and on the organization.”

How can leaders function effectively under VUCA? Henshaw says first they must be more adaptive. “You have to be open to new thinking, and willing to take more risks and experiment with new approaches and ideas. You also need to move more quickly while at the same time step back and be more reflective about what is working, what isn’t, and what can be done about it.”

Resilience and courage are also required in an environment of intense volatility and uncertainty. “Experimenting, taking risks, and moving quickly demand courage. You have to be separate enough from your team to make hard decisions and have the convictions that drive confidence in thinking and behavior. That in turn means organizations are placing more emphasis on leaders’ character. I hear this a lot right now. It’s something we always taught at West Point, and now we’re seeing it in a business context. To be confident, you have to know yourself, and feel a strong connection to your identity as a leader. It can’t be just a role. Your internal standards must be higher than your company’s.”

Marketing: Analytics

Wharton marketing professor Peter Fader says 2015 will see more serious and widespread interest in analytics. “I’ve been doing this technical work for 28 years, figuring out who will do what next and for how long, and what different outcomes we could get. The only real interest in it came from companies who were already easily collecting data, like retailers and service organizations. Now people are falling all over themselves to learn analytics. The breadth of companies and industries that are getting really serious about it is exploding. Within organizations, it’s no longer confined to the programmers and analytics professionals. Senior executives and even CEOs are realizing they need to understand it.”

Fader says they are coming to executive education demanding this kind of technical content. “Some business schools have been surprised by this,” he notes. “But Wharton isn’t just prepared to teach this content — we’re already doing it. We developed the online program Strategic Value of Customer Relationships to help executives make the connection between analytics and strategy. Now they’re coming to us with an interest in the technical side of analytics, and we have an opportunity to show them that those interests will help them run their business better. They will be able to build new strategies that would not have been possible 10 years ago without these skills.”

“It’s not enough anymore to say, ‘We have some technicians over there working this stuff while we run the business.’ Managers and executives now need to know what is going on, and they are interested in going much further into analytics than ever before. They’re coming to programs like Bringing Customer Lifetime Value to Life: Practical Methods and Applications so they can understand where the numbers come from and evaluate the skills of those who are doing it for them.”

Finance: Impact Investing

Chris Geczy, Wharton finance professor and academic director of the school’s Wealth Management Initiative, says investors and businesses alike will pay more attention to social impact investing in 2015. “Impact investing has gone well beyond investors’ values-based decisions, such as screening out tobacco. Today it refers to both the impact businesses have in the world, and the impact of the choices investors are making on financial markets. The notion of social impact is a strategic one. The kinds of projects businesses invest in can not only add value but can attract investors, who want investments that both provide ROI and address societal ills. Those companies that are working toward greater corporate responsibility do good and do well.”

“In programs like Investment Strategies and Portfolio Management and Private Wealth Management, interest in impact investing is really growing. People want to invest with values, and look for companies that are socially and environmentally responsible. Microfinance, for example, is a relatively new investment vehicle that is helping to empower people around the world. Heavy pricing in U.S. equity markets with a decline in yields is helping to drive interest in these kinds of investments.”

Geczy, who is academic director of The Wharton Wealth Management Financial Advisor Online Series, says the supply of impact investing opportunities will continue to grow. “All of this is part of an ongoing evolution of project and asset allocation. For corporations, that means making different decisions about planning and allocating across projects. For investors, there are broader risks and opportunities than we have considered before.”