Companies must be bold and transform, as paradigm shifts reshape the business world

Major paradigm shifts are starting to impact businesses around the world, as the chart shows:

  • Demand patterns are changing as the profitable middle-market of the BabyBoomer years disappears
  • Advanced Manufacturing and AI are set to upend traditional manufacturing operations
  • Reliable renewable energy is set to increase energy security and reduce costs
  • Supply chains are being rapidly reshored
  • They also need to be reimagined to support the growth of the circular economy
  • Financial markets are abandoning the stimulus policies that created today’s asset bubbles

And environmental pressures continue to build. Single-use plastics are just one example. Pressure is mounting on them as negotiators finalise the proposed UN Treaty and EU Directives on plastic waste.

Taken together, these developments confirm there is no ‘business as usual’ option for companies or investors. 

Encouragingly, however, these paradigm shifts also create major new opportunities. The need is to develop a longer-term view and a focus on innovation.  Future Winners have to maintain a dual focus:

  • They have to conserve cash and reduce debt loads to survive in the short-term.
  • They also have to decarbonise their operations in response to climate change and net zero needs.

The auto industry provides a role model in terms of its policy response to these challenges. It is the largest manufacturing industry in the world.

Companies such as Toyota, GM, VW, Stellantis, BYD and Ford could have sat back and tried to ignore the challenge. Instead, they chose to invest in these new markets for Electric and Autonomous Vehicles.

They are downsizing their former core business in gasoline and diesel cars. And they are learning new capabilities as their transformation progresses.

The auto industry, like many others, will have completely changed within the next 5 – 10 years. And those auto companies that don’t transform successfully, probably won’t survive.

Chemical companies need to follow their lead. The key is to adopt a similar set of ‘scrap and build’ policies – to reduce costs and start to access new, high-growth markets. Plastics recycling will be key to future success.

One way of moving forward is to ask, ‘What would Apple-founder Steve Jobs do, if he was still alive and working in the plastics industry?

He wouldn’t be waiting for waste companies and brand owners to establish the new ecosystem.

Instead, he would be leading his team to build the new circular business model as he did when creating the Apple Mac and the iPhone:

  • He would be focused on understanding packaging needs in FMCG and retailer companies.
  • And he would be helping them to identify the trade-offs needed for the recycling industry to produce the volumes required.

Essentially, he would be leading from the front.  He would be building a new ecosystem based on providing valuable services to solve tomorrow’s challenges.

As suggested here a year ago, “We can, of course, all hope that today’s problems find a way of magically resolving themselves. But hope is not a strategy. Tomorrow’s winners will be those companies that accept today’s challenge of planning for a more difficult and uncertain future.

 

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