Inside business: False sense of security

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The Independent Online
Given that they charge clients rather fancy fees for their supposed insights into the way business is developing, perhaps we shouldn't congratulate management consultants for predicting that companies are going to form industry clusters, that employees will call the tune in the knowledge economy, and that medium-sized firms will find themselves under threat. After all, evidence of these trends is all around us.

The findings are contained in Globalisation and the Knowledge Society - the new drivers for business and the workforce, a new book from the Management Consultancies Association (MCA) that examines what Britain needs to do to remain competitive in the next century.

What with McKinsey's well-known report on prod- uctivity and other documents on R&D spending and entrepreneurial activity, it might seem more appropriate to talk of becoming rather than remaining competitive. However, the message retains some power if the crux of it becomes a widely accepted truth rather than merely an opinion.

As the McKinsey report acknowledged, Britain has some organisations that are global stars on anybody's terms. The pharmaceuticals companies Glaxo Wellcome and SmithKline Beecham are obvious examples, while our supermarkets have set some impressive standards.

But there is, as they say, a long tail. And it is hard to avoid the conclusion that this is in part a legacy of Britain's industrial heritage. Certain elements seem to think that many UK organisations have a right to exist.

Consultants are, of course, always talking about change and how it is much faster than before. But current developments mean that, for once, such claims really are true. The rapid adoption of the internet and the resulting increase in e-commerce have the potential to change the business landscape beyond recognition.

British companies, like their counterparts around the world, are starting to throw large amounts of cash at this field. But, as yet, there appears to be little in the way of coherent strategy. Instead, it is almost as if many executives believe that the electronic world is something they have to be in, regardless of how deep their understanding of it is.

They are right to the extent that the internet and its ancillary developments cannot be ignored. But they need to be aware that there are huge potential downsides here as well as opportunities. And that entails having a broader perspective than many businesses currently allow themselves.

Which brings us to the real value of the MCA study "UK plc on the World Stage in 2010", which is sponsored by such leading lights as Andersen Consulting, Ernst & Young and IBM Consulting Group. It should be seen as a wake-up call to all those companies that think they are in special industries immune to events.

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