Is this start of a new era in business?

Nov 24 2009 by Sarah Green, The Journal

IN LONDON yesterday, the country’s business and political leaders met to debate the economy at the CBI’s Annual Conference. Speakers included Gordon Brown, David Cameron and Nick Clegg who explained their recommendations for fiscal recovery.

As well as asking Brown and Cameron about the economy the 30 CBI North East Future Leaders questioned them about high speed rail, the planning system and broadband connectivity. It is a real talking point that for the last three years, CBI’s Future Leaders have attended the conference to represent the North East.

The conference has coincided with the publication of The Shape of Business – The Next 10 Years, a CBI study into the potential effects the economic climate of the past two years may have on business. The report suggests the recession has raised concerns about commercial models, supply chains and finance that will reshape business behaviour.

The report flags four key areas where fresh approaches will develop because of the downturn. Firstly, businesses do not see credit terms falling back to pre-crunch levels and, wary of higher debt levels, firms will look to alternatives to debt-driven growth to protect investment.

Ongoing concerns over a ‘domino effect’ of supply chain failures and issues around trade credit insurance will compel firms to forge more collaborative supplier relationships.

Sustainability and ethics will become more integrated into the business model. Firms will seek to improve accountability and corporate citizenship.

Finally, a more flexible workforce will evolve, assisted by developments in technology and training, and building on the spirit of collaboration between employers and staff which has grown over the recession. For some firms that might mean a smaller core workforce and larger ‘flexiforce’.

We may be at the start of a new era for businesses, in which attitudes to finance and corporate leadership are changed for a generation. What we now need is a more balanced, less risky pathway to growth – one in which the short-term returns may be lower, but the long-term rewards for management success will be a lot more sustainable and secure.

There are important questions around how businesses are going to finance future growth and investment.

And in a more collaborative, less transactional world, closer relationships with customers, suppliers, employees and shareholders look like becoming the new norm.

Sarah Green is regional director of CBI North East