David Garfield’s Post

Have American consumers reached “peak stuff?” Despite headwinds from inflation and interest rates, consumerism has been galloping ahead. E-commerce has grown into a $6 trillion global industry, capturing over 20% of retail sales. Billions of consumers are only one click away from a purchase. And with free or cheap shipping, it’s even easier to place an order. Social media – and the rise of “influencers,” who persuade people to purchase goods – have had a profound impact too. Consumers are receiving a steady stream of advertising and promotion in all different forms. And companies have built supply chains to design and deliver products quickly and cheaply – fueling frequent purchase behavior. Consumers have grown accustomed to “disposable” goods – for example, the average American now throws away over 80 pounds of clothing every year. Many American consumers are feeling overwhelmed by the ever-expanding array of product choices, and the frequency of ads. Many desire some kind of “curated consumption” – where they can turn to trusted sources for information, and trusted brands. However, ironically, some of these same consumers also look for “quick consumption” in order to save time, which leads them back onto the path towards “peak stuff.” Over time, one thing to watch is the shift in buying power to Millennials and Gen Z. Gen Z, in particular, is interested in “conscious consumerism” and “circular economies” with emphasis on quality and sustainability. However, younger generations are also growing up digitally native – relying on social media for product information – and in terms of their income, they’re saving less and spending more. The tide will eventually turn. Some signals – including consumer debt and consumer sentiment – are flashing yellow. But at the moment, consumers are still scaling the heights of “peak stuff.” I discussed this topic with Amanda Mull, in an article in The Atlantic (paywall).

We know that AI has the potential to disrupt most sectors in the economy – what are some real-world examples?   Use cases vary widely across sectors:   Financial Services: AI can detect patterns of behavior that enable institutions to ‘tune’ risk models in unique and dynamic ways. Retail: AI can inform hyper-personalized customer support that is both "always on" and continuously improving. Private Equity: AI can dramatically enhance the speed and consistency of due diligence analysis and financial modeling.   These are just three current examples. Many more are on the way. And as data sets, applications, and queries improve, the solutions will become increasingly sophisticated.    There are plenty of risks, but also the promise of new sources of insights, productivity, and accelerated growth.   I shared my thoughts with Marc Guberti for his article in U.S. News & World Report:

What sets growth and profitability leaders apart from the pack? It’s not strategic thinking. It’s action. In our recent article in Harvard Business Review, AlixPartners CEO Simon Freakley and I dig into a critical differentiator we found in the data collected through our 2024 AlixPartners Disruption Index: growth and profit leaders across industries are action-oriented and prioritize “pace over perfection.”  They make good decisions quickly – a learned skill, and a hallmark of great leaders. The data confirms what we have learned through experience: in today’s persistently uncertain and rapidly changing world, an elaborate strategy can lead a company down the road of yesterday’s reality, unaware of how conditions are changing, and blind to emerging threats and growth opportunities. Instead, senior executives need a mindset and an organization designed to sense, interpret, and adapt quickly to early marketplace signals.  And they need operations that have flexibility and resiliency built in, to enable rapid changes. In short, informed, decisive action is the new strategy. Read more of our thinking in Harvard Business Review: https://lnkd.in/g2QjD7Xu #BusinessStrategy #Disruption #Leadership

In 2023, activist engagements returned to peak levels globally. How are CFOs responding? Leading CFOs understand that their role is not to “defend” against activists; rather, it is to help “future-proof” their companies, to the extent they can. This means taking a very proactive approach to improving financial performance, including capital allocation and portfolio management, as well as cash flow and profitability. CFOs should ask and answer the question, "if I were an activist, how would I assess our company in terms of value creation?" When CFOs analyze their businesses in this way, they are effectively serving as positive “internal activists.” Of course, there may be disruptions or other challenges to the business, and activists may still engage. In these instances, CFOs need to be the point person for translating potential improvements in the business into financial targets and timing. In all cases, CFOs need to lead constructive, fact-based discussions that help their companies achieve, or restore, top-tier performance. I had the opportunity to discuss this topic with with Vincent G. Ryan in CFO Magazine: https://lnkd.in/d_VYsGt5   #CFO  #ActivistInvestors  #Strategy

Davos is now in the rear-view mirror. What did CEOs bring back to their day-to-day jobs? One common thread: scenario planning. CEOs across a wide range of industries agreed on the need to “stress-test” their businesses more rigorously than ever. Specifically, leading CEOs are constructively pushing their businesses for more holistic, and more dynamic, scenario modeling: Holistic: The days of simple “sensitivity analysis” are gone. Companies have to gauge what will happen if they are hit with sudden changes in trade flows, commodity costs, labor availability, and demand – all at once. This requires more sophisticated analysis and simulation. Dynamic: Annual “table-top exercises” for key risks, such as cyber, are also of limited value when business conditions are changing so rapidly. For example, companies need to develop, check, and adjust plans and policies related to AI and other fast-moving challenges and opportunities. Through improved scenario planning, CEOs are trying to “look around the corner” at business risks coming their way, and model the actions required to defend and extend their competitive market positions. I had the opportunity to discuss this topic with Megan Davies at Reuters: https://lnkd.in/gEsmdik5

Are the deep ocean, and outer space, the “next frontiers” for commercial competition and climate impact? A quick view from Davos:

What goes on in the "working sessions" at the World Economic Forum in Davos?

The official theme of this year’s World Economic Forum in Davos is “Rebuilding Trust” – what does this really mean?

The 2024 World Economic Forum in Davos has begun – here are some quick first impressions from Day 1.