2023 is expected to be a challenging year. From rising inflation and operating costs to employee retention and supply chain gaps – the market environment looks gloomy for companies big and small. In order to thrive in this business landscape, it is essential for companies to develop a strategic plan for the future. This means anticipating and navigating through uncertainty while planning for growth.
Key challenges facing businesses in 2023
As we approach 2023, here are key challenges that organizations will have to prepare themselves for and take into consideration in their business planning.
Global growth is slowing sharply as pent-up demand from the pandemic dissipates. Short-term forecasts predict recessions in the US and Europe in the very near term and significantly weaker growth in China in 2023. Despite the possibility of avoiding a recession, the world’s growth is likely to be below trend in 2023, at about 2.1 percent.
With investment opportunities in mature economies becoming limited, turning to emerging economies could be a viable growth strategy. The economies of sub-Saharan Africa and emerging Asian countries appear to have the best chance of outperforming the global average growth rate.
According to an EIU report, the Middle East and Africa, and Latin America will report the highest growth in online sales in 2023, with over 20%, while Asia will see a 12% increase. Amazon plans to enter five countries in 2023, including South Africa, Nigeria, and Colombia. In addition, marketplaces, logistics providers, and payment service providers will have opportunities to go digital in Asian countries.
Talent supply and demand
Disruptions in human capital will also be a major challenge for organizations next year. In the current labor market, the Great Resignation has been compounded by the robust hiring demand in the broader market, as well as a looming recession.
Across industries, employers are struggling to find employees who are able to combine technical skills with human strengths. Manpower Group’s latest Talent Shortage survey shows three quarters (75%) of companies have reported talent shortages and difficulty hiring – the highest level in 16 years.
Work and home are increasingly blurring, and well-being is becoming more important to people. Employees’ stay-or-go decisions are heavily influenced by the workplace environment and culture.
Some organizations are finding unique ways to combat the challenge. As part of the ‘Flex Work’ program at Mastercard, employees can decide when to come into the office and for four weeks each year “work from elsewhere”. Employees can also benefit from uninterrupted time to work, learn new skills, or practice self-care by providing end-of-week flex time and quarterly meeting-free days.
Nearly nine out of ten manufacturers are planning to increase prices next year. Some of the reasons include the ongoing supply chain crisis, problems getting materials from China, and sellers taking advantage of the situation to raise prices. This surge in prices is bound to drive away customers and look for cheaper alternatives, thereby weakening profits.
In 2023, big-box stores and hypermarkets are expected to lose market share to discount and convenience stores as middle-income consumers trade down. A shift in this direction has already been observed in the food retail market of inflation-ridden European markets.
According to a recent report, Aldi overtook Morrisons as the fourth-largest grocery retailer in the UK in September 2022. In France, Aldi and Lidl have increased in market share over the past year. Similar trends are visible in other markets. Placer.ai, which tracks retail footfall, has found that the only growing category of retail was discounters and dollar stores during July 2022.
In 2023, turning to automation and AI-led process will help reduce labor costs. A continued focus on online sales will be crucial for driving growth.
A divided US government
The current divided Congress has set the stage for even more uncertainty for businesses into mid-December, and therefore more difficulty planning for 2023.
According to experts, the result will likely be a divided government, which could affect everything from the stock market to how the federal government responds to a recession.
Some are even preparing two plans for 2023 depending on the results of the elections. Others worry that the gridlock in Congress will stall both traditional and renewable energy initiatives.
Supply chain constraints
In a Forbes, Xometry, and Zogby poll, more than one-third (36%) said supply-chain disruptions had “severe effects,” while more than half (59%) said they were disrupted but were able to cope. More than three-quarters (77%) reported shortages of product components. Approximately seventy-four percent of executives (74%) said another supply chain disruption in 2023 would have a significant impact on their business.
A slew of challenges executives attributed to supply chain disruptions included getting raw materials and supplies to keep production running, finding reliable suppliers, delayed shipments, price increases, and reliance on foreign suppliers. Some needed materials have more than doubled in price since last year. In the supply-chain network, costs have crept up, putting pressure on margins.
Increasing geopolitical tensions and climate change also threaten supply chains. In the event that China’s ties with the West deteriorate further-especially over Taiwan-this could jeopardize the flow of semiconductors out of Taiwan or key battery components and metals from China. Some vehicle and parts makers are already facing production cuts due to a particularly cold winter, which could cause energy shortages in Europe.
Lack of relevant data to inform strategy
More than 95% of organizations suffer from a data-decision gap, or the inability to bring together internal and external data for effective decision-making. Organizations face a number of challenges due to this gap, including regulatory scrutiny and compliance issues, missed customer experience opportunities, and employee retention issues.
While data is abounding, organizations that fail to obtain a holistic, contextual view of complete datasets remain vulnerable to ineffective decision-making and financial waste. In 2023, companies can overcome the data decision gap with the right systems and technologies.
In an increasingly data-driven environment, organizations need to implement effective Data Management systems to ensure employees have the time and knowledge to navigate through data effectively. In a fast-changing environment, data can become out-of-date quickly, and monitoring these changes manually requires a sustained effort from employees, which can prevent them from maximizing their capabilities.
Initiatives enabling businesses to sustain growth
To sustain business growth and keep up with the competition in the upcoming year, the following key initiatives will be absolutely essential.
Upskilling and retaining top talent
It’s no secret that the skills gap is a major issue for businesses across industries. With the fourth industrial revolution on the horizon, the need to re-skill or upskill employees is becoming more urgent.
Companies can and should take on the responsibility of training talent. This can be done in a number of ways, such as hiring recent graduates, using low-code or no-code software, and investing in learning.
By taking these steps, businesses can ensure that they have the top talent they need to stay competitive in the years to come.
Ensuring data privacy and governance
As businesses become more digital, they need to take steps to protect data privacy and prevent cyber attacks. Company data is increasingly under threat from hackers and cybercriminals, so it’s essential that businesses have robust data backup and recovery processes in place.
Conducting penetration testing and vulnerability scanning can help identify potential security weaknesses, and taking proactive steps to protect sensitive data and prevent cyberattacks is essential. By taking these measures, businesses can help ensure data privacy and governance.
As the world wakes up to the reality of climate change, sustainability is becoming an increasingly important issue for businesses. In 2023, addressing sustainability practices will be critical in order to stay ahead of the curve.
Consumers are demanding more transparency when it comes to sustainability, and are looking for eco-friendly products and services. Demonstrating a commitment to sustainability can help you win over customers and save money at the same time.
There are many opportunities for enterprises to make their offering more sustainable. Some of them include using more eco-friendly raw materials, sourcing from local suppliers, and partnering with conscious vendors. Communicating your sustainability programs and initiatives can have a positive impact on both the environment and your bottom line.
Implementing augmented data management
As we move into 2023, data management will become increasingly important. Augmented data management will find strong market traction, helping data management professionals focus on delivering data-driven insights rather than being held back by routine administrative tasks. While the end goal of many data management efforts is to feed advanced analytics and support AI and ML efforts, proper data management forms the bedrock of an organization’s success. Augmented data management needs to be embraced to automate data management tasks through AI.
This will allow data management professionals to focus on strategic tasks that can drive real business value. In order to fully realize the potential of augmented data management, organizations need to invest in the right tools and technologies. With the right platform in place, data management can become a true differentiator for your business.
How can businesses navigate uncertainty in 2023?
There is no one answer to this question, as every company is different and faces its own set of unique challenges. However, there are a few things that all companies can do in order to navigate uncertainty and plan for growth.
As data continues to grow exponentially, organizations must work to overcome the data decision gap. Although organizations will always face challenges as internal and external circumstances evolve, adopting technologies and processes to make sure data is always reflective of the most recent developments can help them make the best decisions.
Netscribes has been a growth partner to some of the world’s most renowned organizations. Through a technology-driven approach to extracting value from data and insights, we enable future-ready strategies and tactical decision-making. Contact us to know more.