Organizations have used management systems for a long time to help them create value and reach their objectives by actively managing risks and continually improving their performance. Such systems help companies manage a range of issues to do with quality, occupational health and safety, and the environment, as well as social and ethical concerns.
But for management systems to continue to be a driving force for change, they must adapt. To see how management systems must adapt to stay relevant in the world around us, let’s look at seven global megatrends that we foresee will affect organizations in the coming years and have the potential to impact the future of management systems. DNV GL has identified these megatrends by gathering qualitative input from a range of companies in different industries and geographies to envision the future state of management systems.
Global consumption of almost every commodity has increased dramatically over the past century, and this trend looks set to continue aggressively into the foreseeable future. Demand for resources has increased due to a growing and richer global population, especially in emerging economies. This has led to the depletion of increasingly scarce natural resources and hence supply challenges. The world has entered a period of intensified resource stress.
Growing concerns around energy security and price, food challenges such as security and gene modification, and water scarcity will create new risks and opportunities. Customer awareness and stakeholder expectations are steeply rising with regards to sustainable sourcing and the efficient use of resources.
The economy is shifting from the West to the East. The global middle class is set to double in size by 2020 and majority of new entrants are Asia-Pacific residents. This leads to increased spending on nonessential goods which may lead to rapid economic growth.
A greater share of GDP must be allocated to solve the problems created by resource depletion, pollution, climate change, biodiversity loss and inequality.
If we continue doing business as usual, global greenhouse gas (GHG) emissions are expected to rise to 20% by 2020. The next 10 years are crucial to obtain lasting emission reductions at a reasonable cost and to prevent us from reaching the irreversible tipping point.
The use of big data will become a key basis of competition and growth for individual firms. Organizations will leverage data-driven strategies to innovate, compete and capture value from deep, real-time information. However, there is also the issue of rising security and privacy threats. As analytics and social media reach every aspect of an organization, safeguarding data will continue to be a major concern for individuals and organizations.
Future of work
The workplace of the future will be different from the workplace of today. There will be more flat organizational structures and cross-functional project teams which will be driven by increased creativity, flexibility, remote work and reciprocity. To deal with this, organizations must provide a framework for conflict prevention and conflict resolution. The future workplace will require the integration of flexible rules to function within existing formal structures.
People will also be more connected to each other with advanced devices. The expectation is that there will be 50 billion connected devices in 2020, meaning an average of 6.58 devices per person!
Lack of Governance
Along with globalization comes population and economic growth. This means high interdependency and complexity leading to global challenges and systemic risks. Such challenges on a global scale require new forms of international cooperation, governance and enforcement.
The world’s population is estimated to reach 9.6 billion people in 2050 with 95% of the future population growth expected to occur in emerging economies.
Seventy percent of people are likely to live in cities, many in mega-cities with more than 10 million people. These mega-cities will face great social and economic risks from climate change as they will be in environmentally fragile locations leaving them vulnerable to flooding, typhoons and earthquakes. Organizations need be aware of these seven global megatrends and act accordingly to remain sustainable and keep up with stakeholder expectations.
Management Systems in the Future
What do you think management systems will look like ten years from now? Think about the transformations that organizations will undergo to keep up with changes in the industry and the seven global megatrends. How will management systems evolve to support these new business processes and operations? Organizations need to be conscious of the impact of these megatrends and understand that ‘business as usual’ is no longer an option.
First, look at the changing role of management systems in organizations. They are moving away from the physical boundaries of organizations to the complete value chain, incorporating society at large. Future management systems are no longer just a tool available to organizations, but have become integral to organizational culture, supporting its values and goals. They are an invisible but always present and living part of organizations.
Management systems will be designed and formulated through extensive engagements on policies and objectives with stakeholders including consumers, employees, shareholders, the environment and society at large. Leadership and employee engagement are of paramount importance, ensuring efficient use of management systems fitting to the organizational structure chosen.
To ensure that organizations are sustainable, they will need to demonstrate that they are creating shared value for relevant stakeholders. They will have to look beyond their current boundaries to ensure that management systems are integrated and cover the entire value chain within the business, such as technology, products, product designs, sourcing, manufacturing, marketing, distribution and service. Stakeholders are aware of how various business processes across the value chain can impact the end product and society. Hence, for organizations to be successful, management systems must include the value chain and ensure sustainable process across the complete chain.
What about technology? How will it affect management systems? Advancement in technology will make management systems become a real-time communication tool. Management systems involve the collection, processing and analysis of vast amounts of data. This needs to be supported by constant communication with stakeholders, suppliers and other parties. Operating within a cloud computing model, technological innovation prevents this huge amount of data from becoming overwhelming by using background analysis that supports front end dashboards and other management information communication.
Want to know more about how all this will have an impact on companies in the future? Visit www.dnvgl.sg/assurance/Future2025/index.html to view case studies of how five companies in five different industries will be doing business in 2025.