In this article, we look at the seven biggest challenges businesses will be facing in 2023. We discuss challenges in relation to the economy, supply chains, consumer expectations, digital transformation, cyber security, sustainability, and finding the right talent.
As a futurist specializing in the intersection of business and technology, it’s my job to look ahead and advise companies on how they can prepare for a rapidly changing world.
Here are the seven greatest challenges every company should be ready for in 2023:
1. Inflation and Economic Downturn
The headlines are already filled with talk of skyrocketing inflation, and that trend will likely continue in 2023. Many economies will stagnate or shrink, and businesses need to prepare for that reality.
The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, reported that the organization had downgraded its forecast for 2.9 percent global growth in 2023. The IMF cited rising risks of financial instability and recession.
Companies can face inflation by establishing end-to-end, actionable visibility of spending by business process, function, cost category, and business unit, as well as reducing spending.
2. Supply Chain Security
Supply chain security is another key issue. Challenges began with COVID-related backlogs and have been made worse by Russia's invasion of Ukraine and labor shortages due to the Great Resignation. This has made parts and products harder to obtain, as well as pushed prices up (e.g., energy, grains, computer chips, oil, and so on).
According to a report by Accenture, supply chain issues could result in a potential €920 billion cumulative loss to the gross domestic product (GDP) across the Eurozone by 2023.
Companies should resist the urge to over-order to compensate for backlogs, which could worsen the situation. Instead, focus on long-term recovery and restructure your needs to prevent similar shortages in the future.
3. Increasing Customer Expectations
Customers are demanding more immersive customer experiences in the real world as well as in the metaverse.
Customers entering brick-and-mortar stores aren’t just looking to buy products — they want memorable in-store experiences. If your company has physical shops, consider adding more immersive experiences.
Online retailers should consider adding extended reality (XR) experiences like virtual dressing rooms that allow customers to “try on” clothing, accessories, and makeup without leaving their homes.
No matter how you engage with consumers (online, offline, or a mix of both), ask yourself, “How can we add even more value for our customers by turning this interaction into an experience?”
4. Accelerated Digital Transformation
Artificial intelligence (AI) is already starting to augment all of our businesses, and that trend will continue to accelerate next year. At the same time, other technologies like 5G, blockchain, the cloud, and the Internet of Things (IoT) are building and speeding up AI, and all of them are enhancing each other.
This is rapidly creating a world of ever-faster technological developments. In response, every business must think of itself as a tech business. Companies need to re-design their processes and ensure their people have the skills needed for a world where we increasingly collaborate with and work alongside capable and intelligent machines.
5. The War for Talent Will Intensify
Speaking of workers — companies in 2023 must be ready to cope with a continued talent shock. We’ve been hearing about the “War for Talent” for years, but now it feels like the war is deepening.
Companies across industries are facing massive gaps for vital future skills, and they will need to re-skill or upskill massive sections of their workforce to get ready for the 4th industrial revolution. Companies can and should take on the onus of training talent by taking steps like hiring people straight out of school, employing low-code or no-code software for critical needs, and instilling cultures of continuous learning.
On top of that, the pandemic has made many people reevaluate their jobs, leading to mass resignations in many sectors.
To attract top talent, employers must offer a working environment that is appropriate for the new world of work, including job flexibility, authentic leadership, diversity, etc.
6. Data and Device Security
Cyberattacks are on the rise, and ransomware and phishing scams are now a common occurrence. As businesses become more digital, they accumulate more data, which becomes highly attractive to cybercriminals that intend to steal it and hold organizations hostage to monetary demands.
Mobile and IoT devices are not immune to cybersecurity threats. Additionally, quantum computing is now emerging, which could render existing security systems obsolete.
Companies can take steps to protect themselves by taking proactive measures like evaluating their data backup and recovery processes, conducting penetration testing and vulnerability scanning, and taking proactive steps to protect sensitive data and prevent cyberattacks.
Climate change is the world’s largest business challenge, and consumers are demanding transparency in sustainability practices as well as more eco-friendly products and services.
Companies can respond by viewing the whole picture of their business practices and auditing their full supply chains. They should also consider switching to renewable energy, moving to more sustainable packaging, and allowing people to work remotely when appropriate (which can help lower emissions).
Becoming demonstrably more sustainable can not only satisfy consumers’ needs but also help you spot efficiencies and savings that can have a positive effect on your bottom line.
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