Daily Archives: September 20, 2009

Will the Big Shift Waves Give You The Big Shaft?

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Honestly, I don’t know the answer to this. What I do know is that I agree with the Supply Chain Editorial Staff and that graphs based on loosely defined waves don’t tell you very much. But let me back up.

Recently, Deloite released the 2009 Shift Index which is a 142 page PDF where they attempt to define and measure the forces of long-term change and understand the deeper trends that might soon make the concept of “normal” in business a thing of the past. To this end, they defined three “waves” that they believe capture the shifts that are taking place in the global economy:

  • Foundation Wave
    changes in the business landscape, including digital technologies and the liberalization of government policies
  • Flow Wave
    the increasing pace in which knowledge, capital, and talent move across a company and around the globe
  • Impact Wave
    the business impact of the first two changes with respect to overall corporate financial performance

Then they created indices and measure the shifts. And this leaves me scratching my head. How do you prescribe meaning to a rate of change in an index with a definition that is nebulous to begin with?

That being said, some of the trends that Deloitte has been tracking, which were quantified in the report, are certainly worth noting. For example, the average Return on Assets (ROA) of US companies has decreased 75% in the last 45 years and digital technologies are being adopted at rates 2-5 times faster than previous infrastructure shifts such as the telephone and electricity. If they are relevant to your industry, the sooner you identify these trends and their potential impacts to your operations, the better off you will be. If you don’t plan for them early, you might soon find yourself among the companies that are experiencing a rapid deterioration in performance.

To that end, it’s certainly worth downloading a copy of the report and giving it a cursory read. It contains a lot of good information on a number of trends that could impact your supply chain, some of which are summarized in this recent Supply Chain Digest article on a new normal. Just don’t be afraid to shaft the shift indices with the short straw. I don’t think anyone really knows what the global business landscape will look like in 10 to 20 years, and I certainly don’t expect a magic index to shed any long-term insights.