The last few years have brought about much uncertainty. A global health crisis. War in Ukraine. Rising inflation. What the future will hold is anyone’s guess, but consultancy services are trying to keep their clients advised, prepared for what’s to come.
Luxembourg consulting company MindForest is one such company. Specialising in change management, it recently partnered with the Luxembourg School of Business to develop recommendations to help companies in the grand duchy handle, even potentially reconfigure, early warning signals (EWS). After initial interviews were conducted with local senior business leaders to collect qualitative data, a survey was launched in February to gather quantitative data. In June, an executive publication summarising the findings will be released.
MindForest senior consultant Marion Malchair has been part of the project and says the publication will be “for professionals, so readable, practical… we will give concrete tools and keys to see where [they] stand and that could be applicable to any business leader,” across various sectors.
Helping companies detect EWS is part of the work MindForest is doing regularly, with some of the largest employers in Luxembourg but also for other organisations. “There’s a tendency where the more heavily regulated the market that the company is operating in, such as financial institutions, the more they have a better orientation on risk matters,” explains Malchair’s colleague, senior consultant Tom Reuland. “Risk is a part of early warning, similarly it’s a part of strategic foresight, but it kind of leaves out the whole aspect of what opportunities are on the market.”
The human dimension
The two consultants argue that much of employees’ having the right reflexes to spot trends and allow the information to percolate within an organisation and flow to the right decision maker(s) involves culture and mindset. MindForest says it “puts the human factor at the centre of its consulting activities”, and it’s this human element that indeed makes their work interesting yet complex.
“When we talk about organisation, because you have a human dimension, you always have complexity,” says Malchair. Effecting organisational change may not only require humans changing their behaviours--but even if you manage to change one node of an organisation, there’s no guarantee that other nodes would follow suit.
When we talk about organisation, because you have a human dimension, you always have complexity”
With humans come biases too. “We have ambiguity because usually our clients come with one question, but is it the right question? [What] is the objective you really want?” adds Malchair.
EY is regularly listed as a competitor to the likes of other global companies such as McKinsey & Company. And EY Luxembourg partner, financial services consulting service line leader concurs that part of their own work involves helping their clients make decisions based on bias-free, objective data. “The way data is collected and historically retrieved can lead to certain unconscious biases sometimes,” he says. “Confronting the outcome with market standards, peer results and historical performance helps to demonstrate the existence of these bias[es] and overcome [them], with the proper data management.”
Avoiding bias at the client level is one thing; doing so at the consultant level is another. Malchair and Reuland, for example, say that MindForest’s employees challenge one another, discussing from various perspectives in a bid to remove any potential biases in their own thinking.
EY Luxembourg also favours such an approach. “Consultants could be exposed to possible cognitive biases, particularly if their team is not diverse enough. At EY, we are focusing on building diverse and gender-balanced teams to minimise the potential impact of these biases.”
Tools of the trade
Larger advisory firms like the Big Four can, of course, also tap into their global networks, which can also help them to assess megatrends and how they could make an impact from region to region. It’s similarly the case for a legal firm like Allen & Overy as well, with over 40 locations worldwide. In a , newly named partner Catherine Di Lorenzo--who heads the IP, data and tech practice--says, “We now have partners leading each and every practice of our firm, and we are a full-service firm and one of the few international firms [with] a full-service offering which is led by partners,” which she calls a “big differentiator”.
Of course, the tools of the trade vary across issue to issue, and from sector to sector. For a firm like Allen & Overy, this could mean that legal questions may not yet have precedents, especially in rapidly-developing areas like technology.
Meanwhile, EY has its EY NextWave framework, which Moscetti calls “a unique approach to delivering value for our clients, for their and our people, combining social impact and financial outcomes.” Also helping their clients are frameworks like DevOps, Agile and Scaled Agile Framework, among others.
MindForest also has a variety of methodologies in its toolkit--the conceptual framework known as Cynefin, proposing different decision-making domains. There’s design thinking, which centres on solving problems in an innovative way (see page 42). And plenty of roadmaps, from the lifecycle of a trend, understanding and creating futures and more, which serve as a basis for reflection and inspiration.
Megatrends impacting Luxembourg
For most advisory services, keeping an eye on the regulatory and political climate is a critical part of strategic foresight. Take tech, for example: Allen & Overy’s Di Lorenzo says the “next big thing” companies should now be focused on is the so-called “cookie law”. The CNPD recently issued guidelines on web cookies and similar tracer technology. Among other topics, there’s also the EU artificial intelligence regulation in the pipeline--another development which should be on companies’ radars, she argues, “especially if they use these kinds of tools for recruitment and HR.” Of course, even regulation isn’t necessarily keeping step with the rapid speed at which tech is developing.
On the tech radar for EY Luxembourg? “Beyond the financial excitement on the metaverse and virtual worlds, NFTs [non-fungible tokens] represent, in my view, a very interesting development route for the real world,” Moscetti states.
The second half of 2022 will probably be still under the same market conditions, leading to additional short [to] mid-term business moves and regulation adaptations”
But on other trends linked to finance, for example, he’s not as optimistic: “In a context of strong inflation and increase of interest rates, the global economy is in great turmoil, and the financial markets are showing signs of nervosity,” he explains. “The second half of 2022 will probably be still under the same market conditions, leading to additional short [to] mid-term business moves and regulation adaptations, primarily.” He adds that should there be improvements in the geopolitical context as well as market recovery, he anticipates “strong activity” when it comes to mergers and acquisitions (M&A).
He anticipates involved discussions about issues such as real estate, infrastructure, tax and more, and also how such topics will influence the future of Luxembourg’s attractiveness as a market, in terms of recruiting and retaining high talent.
Those issues are very much on the radar for MindForest as well, as are next year’s elections. The anticipated population growth of Luxembourg will further strain an already headache-inducing traffic situation and access to affordable housing--which, in turn, would reduce the attractiveness of the country, i.e., for long-term residency. While Reuland predicts the increased housing prices eventually plateauing, he wonders what more could be done in terms of transport. While praising the free mobility scheme that entered into effect in March 2020, he questions whether Luxembourg should at some point implement a congestion charge, similar to ones in large cities like London, to prevent increasing traffic in the city centre.
Luxembourg can serve as an interesting microcosm when it comes to megatrends. The MindForest consultants argue that it’s advantageous in the sense that Luxembourg is small; it can adapt with its neighbouring countries (comprising around 45% of its workforce), while its international dimension means there is openness to being influenced from other countries globally. “But once we determine what the megatrend is, we are really quick to adapt and respond to it,” adds Reuland.
For Moscetti, the financial and green financing sector and international, cross-cultural nature bring strengths, but “the challenge comes with the specificities of the Luxembourg market… [It] is therefore by nature often exposed to megatrends in their early stages. I believe the Luxembourg leaders have developed a strong sense in assessing these trends and how or when they will actually support the local economy.”
“The crisis was not a black swan”
Nevertheless, and especially as a result of the pandemic, companies are now more alert for coming trends. As EY’s Moscetti says, “More than ever in periods of high uncertainties, the ability to receive third-party foresight is essential for our clients.” They’re asking not just about regulatory updates but also innovative examples in the market and strategy-related advice.
Reuland adds that even restaurant owners would be more inclined now than three or four years ago to have a continuity plan--at least the ones who managed to weather the crisis.
“The crisis of the pandemic was not a black swan,” Malchair adds. “[Nor was] the war in Ukraine. You had warning signals--it’s just that it doesn’t belong on your cognitive map. You think, no, it won’t happen--but really, you have the data.”
Alas, there’s that complex human dimension creeping in once again…