As 2010 draws to a close, the time is ripe to reflect on some of the biggest business developments during the past twelve months. Here, three Harvard Business School professors—Bill George, Bill Sahlman, Rosabeth Moss Kanter—offer their thoughts on some of the year’s major developments in the world of business and economics.
Bill George, Professor of Management Practice
Social networking is the most significant business development of 2010. During the year social networking morphed from a personal communications tool for young people into a new vehicle that business leaders are using to transform communications with their employees and customers, as it shifts from one-way transmission of information to two-way interaction.
Social networking is also flattening organizations by distributing access to information. Everyone is equal on the social network. No hierarchies need get involved.
From a leadership perspective, social networking is making authentic leadership a reality and a necessity for 21st century leaders. You can’t hide on your social network when you’re revealing who you are and what you really believe. Transparency is essential here.
Even more important, this new phenomenon is enabling business leaders to regain the trust and credibility they have lost over the last ten years.
William A. Sahlman, Dimitri V. D’Arbeloff-MBA Class of 1955 Professor of Business Administration
From where I sit as an economist, it’s still all about the economy and the long-term impact of the problems laid bare by the Great Recession. During the financial crisis, the world came to the apparently shocking realization that debt financing entails risks. Financial institutions, households, and governments all suffered because they had too much leverage.
Though the corporate sector has generally decreased leverage, the same is not true of government, particularly in the United States. Every company and household here and abroad will ultimately be affected by the unabated and accelerating gap between government revenues and spending.
Every business leader and every citizen has a responsibility to understand and help address these issues. Otherwise, as some scenarios in Europe have already made clear, the United States will ultimately suffer the same fate as all countries that spend way beyond their means.
Rosabeth Moss Kanter, Ernest L. Arbuckle Professor of Business Administration
In many ways the biggest business developments of 2010 were the things that didn’t happen. Big companies with cash didn’t spend it. Banks with cash didn’t lend it. Small businesses didn’t attract capital and thus didn’t help reduce unemployment.
Yet even in the midst of gridlock in Washington, economic anxiety around the world, and government liquidity crises in Europe, technology marched on, seemingly impervious to global events. Technology companies with the capabilities and courage to innovate were bright spots and signals of important trends for the future.
One enormous continuing development is the exponential growth of social networking media and the increasing use of social media by companies to crowdsource ideas, mount contests to award prizes and gather audiences, and attempt to create dialogues with customers.
The year 2010 accelerated the trend toward the use of social networking sites for an increasing number of commercial purposes and gave social networking companies the confidence to remain independent rather than be acquired by existing players.
While uncertainty continues to cause wary businesses to wait before investing, innovation and entrepreneurship are invoked by leaders as the one sure way out of economic distress.
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So there you have it…in 2010 the dominant business developments revolved around the economy and the explosion of social networking sites. Time will soon tell if the trend Kanter describes as “the webification of life” heralds a radically altered future for business education.