The business environment has been rapidly changing since the pandemic, as companies have been perpetually uprooted from what they deemed to be the status quo. While many business challenges have posed difficulties for companies over the last few years — with some even facing bankruptcy — business adaptability has been hailed as the new competitive advantage.
Companies looking to thrive must be aware of current business issues and create flexible goals tailored to ongoing changes. To help business leaders succeed amidst current business problems, this article covers the five most significant business challenges in 2024 and solution-oriented goals you can create to overcome these.
What are the current business challenges?
While many business challenges have surfaced (or worsened) in 2024, companies should address the following current business issues:
- Creating stability in the age of uncertainty
- Adapting to the future of work
- Adopting ESG as part of your business model
- Accelerating digital transformation
- Cultivating robust agility
Business challenge #1: Creating stability in the age of uncertainty
COVID-19 and the Russia-Ukraine war have disrupted the equilibrium of supply and demand, sending shock waves through the world economy. The compounding effects of these current business problems affected demand, the cost of goods, supply chains, and investment decisions, resulting in a period of inflation — and increasing the likelihood of a recession or stagflation.
According to the OECD, year-over-year inflation rose to 9.6% in May 2022, representing the steepest price increase since 1988. This resulted from a combination of inflationary pressures, namely an increase in demand, energy costs, and supply chain disruptions.
While the pandemic initially decreased demand due to health scares, lockdown measures, and travel restrictions, vaccine rollouts and monetary stimuli policies skyrocketed demand beyond what supply chains could handle. The increased demand, coupled with the effects of the Russia-Ukraine war, has caused the largest increase in energy prices since the 1973 oil crisis, affecting the overall price of commodities.
In addition, the pandemic caused delays in the production of many goods, which resulted in undiversified supply chains, mass layoffs, trucker shortages, and factory shutdowns that slowed the continuity of supply chains and raised prices for consumers. Combined, these pose one of the biggest challenges for businesses today.
Looming recession or stagflation
Central banks have already started implementing contractionary monetary policies to counter the effects of inflation. Yet, achieving the textbook “soft landing” is rare, as restrictive monetary policies can easily lead to a full-blown recession. This can prompt businesses to prioritize cost-effectiveness, resulting in layoffs, decreased profits, reduced cash flow, and limited R&D.
Stagflation (where a recession sets in before prices have had a chance to decrease) is also a possible business challenge that can result in low growth, high unemployment, and inflated prices. This unfavorable combination can wreak havoc on economies and cause a dilemma for policymakers, as trying to lower inflation may cause further unemployment, while decreasing unemployment can worsen inflation.
What to do
Given this period of instability, it’s a good opportunity to readjust your business goals and adapt to economic rifts by, for example, recession-proofing your business. Here are three focus areas for your business goals to navigate this business challenge:
- Ensuring spending visibility
- Investing in technology and innovation
- Upskilling existing employees
Ensuring spending visibility
Gaining an acute understanding of your organization’s spending can help your business stay afloat. By creating better visibility into your spending, you can get a detailed picture of how, where, and why money circulates throughout your company. Using this knowledge, your organization can:
- See where money is wasted, allowing you to cut costs and increase your savings
- Enhance prioritization and resource deployment
- Understand which activities can be automated
- Improve and adapt your sourcing strategy
- Streamline operations
Investing in technology and innovation
Technology can reduce business costs via “digital deflation.” As digital products and services are cheaper than offline alternatives, your business can use them to decrease costs and lower consumer prices. Moreover, implementing tech tools that automate repetitive tasks, such as scheduling and billing, can streamline processes and allow employees to focus on more strategic activities. This facilitates more cost-effective business operations and weakens the effect of economic fluctuations on your business, thus reducing its impact as a current business issue.
“What economists know, but the news reporters generally ignore...is that digital goods and services typically reduce both actual and measured inflation.”
Upskilling existing employees
As increasing headcount becomes expensive during periods of inflation (and challenging during a recession or stagflation), your organization should set goals around upskilling employees. In addition to mitigating the effects of economic disruptions, upskilling employees can benefit your company in several ways, including:
- Driving employee engagement and productivity
- Making your employees and business adaptable
- Increasing talent retention and acquisition
- Improving ROI and reducing waste
- Saving on recruitment costs
Business challenge #2: Adapting to the future of work
Ever-changing market dynamics placed adaptability at the forefront of strategic business initiatives, resulting in deviations from traditional working models. More and more businesses are now taking part in the gig economy and introducing hybrid work structures — and while these enable flexible operations, they also create a few business challenges.
While the gig economy is not a new concept, the pandemic accelerated its adoption rate, with Mastercard revealing that the gig economy will be worth $298B by 2024 — a 122% increase since 2018. The rise in these transitory business relationships can bring about business problems, including:
- Difficulty setting expectations: Companies and gig workers may be unsure of what they can expect from each other due to ambiguous and undefined contracts or service level agreements
- Poor communication: Businesses may find it challenging to manage and track communication with gig workers
Contrastingly, hybrid work was primarily unheard of before the pandemic. According to a 2020 Pew Research survey, 20% of employees whose jobs could be done remotely worked from home either all or most of the time pre-pandemic compared to 71% working from home post-pandemic. This rapid switch to hybrid work increased employee engagement and decreased turnover rates — but also propelled current business issues such as:
- Organizational misalignment: Achieving alignment in a hybrid workforce can be difficult, with remote employees feeling disconnected from the broader company strategy
- Difficulties establishing connection and culture: In-office employees can easily collaborate, assimilate to the company culture, and build rapport with leadership, while remote workers may feel isolated and detached
- Trust issues: Hybrid work can foster feelings of mistrust and hostility, where managers don’t trust their remote employees, and in turn, employees resent managers for deeming them incapable in a remote setting
See more challenges of hybrid work
What to do
To work around these current business problems and make the gig economy and hybrid model work for your organization, set goals around:
- Enriching your tech stack
- Facilitating interpersonal relationships
- Building trust by setting clear expectations
Enriching your tech stack
An upgraded tech toolkit focused on productivity, collaboration, and product management is necessary when working with hybrid, remote, and gig employees. These tools can help you streamline communications, assign tasks, and track progress — making them essential to the effectiveness of your organization.
Facilitating interpersonal relationships
A proactive approach to cultivating internal relationships is necessary for building unity amongst hybrid workers. This can involve regular check-in meetings, reiterating organizational goals, creating Slack channels for various hobbies, and establishing shared rituals. While these may not feel the same as in-person interactions, they can strengthen interpersonal connections and boost teamwork.
Build trust using clear expectations
A great way to fortify trust and enhance communications with remote and gig employees is to clarify expectations collaboratively. This involves outlining duties, contributions, and means of working (e.g., availability, work-life balance, documentation) to enhance the well-being and efficiency of employees.
Business challenge #3: Adopting ESG as part of your business model
The younger generations today are known for their purpose-driven, ethical, and community-oriented approach to consumption, careers, and investments. Given the environmental and social impact of current events, newer generations have nurtured a keen interest in Environmental, Social, and Governance (ESG) initiatives, with:
- 99% of millennial investors interested in sustainable investing
- 54% of millennials and Gen Z holding ESG investments
- Gen Z preferring to purchase from — and spend more on — sustainable brands
Therefore, ESG initiatives are becoming a must-have for business longevity. Yet, a key business challenge faced by companies is uncertainty on how to incorporate ESG into their operations.
Learn more about ESG principles
What to do
The importance of ESG makes it integral to your business strategy. You can get your company on the right track with ESG — and avoid the business challenges brought on by not doing so — by:
- Using an ESG framework
- Introducing DE&I initiatives
- Educating employees on ESG
Using an ESG framework
While adopting ESG can seem complex, using an ESG framework can simplify the process. These frameworks help you structure ESG commitments, ensure consistency across ESG reporting, and meet stakeholder needs. A few popular ESG frameworks your business can use are:
- The Science Based Targets initiative (SBTi): Enables companies to set science-based targets to increase their competitiveness
- The Future-Fit Business Benchmark (FFBB): Transforms theory on systems science into a set of principles, indicators, and guides for businesses
- ISO 14001: Highlights organizational requirements for improving environmental management systems and environmental performance
Introducing DE&I initiatives
Diversity, equity, and inclusion (DE&I) is part of the ‘Social’ component of ESG. It involves welcoming a diverse workforce, valuing different identities and perspectives, and ensuring employees can access the same opportunities. Therefore, working towards DE&I goals is crucial to ESG success. As you evaluate your DE&I goals, start by:
- Auditing the existing DE&I culture in your organization
- Emphasizing your organization’s dedication to DE&I across the company
- Tracking DE&I metrics to measure the success of your initiatives
- Ensuring senior leadership is on board with current DE&I initiatives
Educating employees on ESG
Another critical aspect of integrating ESG into your organization is ensuring your employees understand ESG. Therefore, one of your focus areas should be to create training programs that educate employees on the purpose, benefits, and value of ESG. This training program can discuss:
- Facts about ESG (e.g., statistics on climate change)
- The current state of ESG in your company
- The value ESG can bring to your business
- How your organization will incorporate ESG (e.g., ESG-based investing, DE&I policies)
- What metrics and tools your organization will use to measure ESG performance
Business challenge #4: Accelerating digital transformation
A robust digital transformation strategy improves productivity, data-driven insights, decision-making, customer engagement, and revenue. With more and more companies recognizing the value (and necessity) of ongoing digital transformation, global investment in digital transformation is set to double between 2020 and 2024.
However, the widespread investment in digitization tools — and the vast amount of data these generate — can give rise to several business challenges, including:
Data management issues
Companies are now working with large sets of data extracted from diverse sources. These tend to have different formats, purposes, and levels of completeness, making it difficult to identify errors, erase duplicates, and assess the validity of your data.
Cloud computing limitations
As more industries rely on cloud computing in the wake of the pandemic, a one-size-fits-all, general-purpose cloud service may be insufficient for industries that need to meet specific requirements, regulations, or guidelines.
Data privacy and cybersecurity
Hybrid work, digitization, and cloud reliance threaten data security, as employees now use both company and personal devices to manage their work. Consequently, data security is a pertinent business challenge, with cyberattacks such as phishing, ransomware, and cloud vulnerabilities on the rise.
What to do
To diminish the adverse effects of digital transformation — and stop it from becoming an ongoing business challenge — you can establish business goals that cover:
- Data consolidation and observability
- Shifting to industry cloud
- Investing in cybersecurity AI
Data consolidation and data observability
Given the amount of disjointed data businesses deal with, data consolidation and observability are essential to data management. By consolidating your data and storing it in one place, you can better manage it, reducing operating costs and improving productivity as a result. Once you’ve consolidated your data, data observability is imperative. This involves monitoring and tracking your data to discover issues, remove bottlenecks, and assess overall performance.
Shifting to industry cloud
If your business is in a highly regulated industry (e.g., finance, healthcare) or requires specialized needs, you can shift to using the industry cloud (aka vertical cloud). This is a tailored, purpose-built cloud system that you can customize to meet your industry and business needs (e.g., compliance, operatory, security). This way, you can easily accommodate for challenges in business, disruptions, or changes in your industry.
Investing in cybersecurity AI
Another one of the current business issue is increasingly sophisticated cyberattacks, which are difficult to anticipate and overcome manually. Targeting these threats requires complex and self-adaptive solutions, such as cybersecurity AI. Cybersecurity AI detects and responds to breaches by analyzing vast amounts of historical data in real-time and pinpointing deviations from the norm. As such, they can be a valuable tool for businesses looking to stay on top of their data threats.
Business challenge #5: Cultivating robust agility
Agility helps your business stay competitive and buffers against sudden jolts in the environment, and it’s become even more necessary to your organization in 2024 — especially as it increases employee engagement, customer centricity, and operational performance by 30%. Yet, despite 92% of C-level executives believing that agility is vital to organizational success, there is a lack of clarity on how businesses can create an agile working environment, with agility engrained in the company’s culture, employees, and systems.
What to do
There are many ways of cultivating a company that functions on agility. However, the best ways to incorporate agility into the core of your company involve:
- Thinking of your business as an adaptable organism
- Relying on agile goal setting
Thinking of your business as an adaptable organism
The age-old understanding of businesses as machines was born when Henry Ford created the assembly line. While this business paradigm has spread since then, it hinders organizations from becoming agile, as simply placing a machine in a new environment isn’t effective. If taken to the extreme, it can become an outright challenge for businesses.
To create agility, think of your organization as a living organism, where different parts of your business interact with components inside and outside your environment. Introducing this new paradigm requires you to reorient your business’s internal structure by:
- Moving from complete bureaucracy to structures that empower teams to take accountability, collaborate, and become self-sufficient
- Encouraging continuous learning cycles and short feedback loops that incorporate experimentation, innovation, and growth
- Establishing a united purpose and end goal that enables everyone to recognize and seize opportunities
- Creating a people-centered organization that focuses on collaboration
- Integrating new technologies to stay competitive and subdue the impact of current business issues
Relying on agile goal setting
An agile organization recalibrates goals according to current business problems, keeping the business relevant, timely, and aligned. Use the following tips to create agility across your business goals and overcome incoming business challenges:
- Create short-term and long-term goals: Your long-term goals act as a North Star, while short-term goals adapt to changes in the market environment and align with your long-term vision
- Establish measurable goals: Without goal measurability, you don’t know what (or whether) things need to change
- Schedule regular check-ins with employees: This can cultivate a qualitative and nuanced view of goal progress, goal relevance, existing challenges, and overall alignment
- Set collaborative team goals: A collaborative goal-setting approach can help you prioritize goals, discover solutions, and accommodate changes at the macro and micro level
- Choose an agile goal-setting framework: An adaptable goal-setting framework such as objectives and key results (OKRs) can help you create adjustable, measurable, collaborative, and ambitious goals that keep your organization aligned and agile
Learn how OKRs and agile work together
Staying ahead of current business issues
With a tumultuous business environment and an increasingly competitive market, staying afloat is no longer an option. As a business leader, reorienting your business systems towards adaptability is vital to your success. To overcome today's business challenges, focus on:
- Upgrading your internal resources, including financial operations, skillsets, and tools
- Improving communications and relationships with employees
- Making ESG a non-negotiable aspect of your business strategy
- Facilitate data management, compliance, and security using specialized tools
- Incorporating agility across your business
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