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Tuck Faculty Predict Business Trends in 2023

From corporate communications to investor activism, Tuck faculty members, including Dean Matthew J. Slaughter, share their business predictions for 2023.

What’s next in 2023? We asked a handful of Tuck faculty members what trends they’re watching in 2023, and what predictions they have for business in the new year.

Paul Argenti

Paul Argenti

Professor of Corporate Communications

Areas of expertise

Corporate Communications

Prediction

  1. Companies are going to be struggling with how to respond to pressure from agitators on the right and left about social issues. So far, it has been easy to see which side makes sense. I see shades of gray coming, but the pressure building in 2023. Having a strategy in place beforehand will be the key to success. In addition, not responding is a response, which a lot of executives do not realize.
  2. Anti-woke arguments will get louder as we lead up to a big election year. With nearly half the states having some sort of gripe with ESG investing, companies, particularly those on Wall Street, will need to think about how to position their climate change strategy as well as other social issues in an increasingly critical environment. If they decide to back off from their positions, they will have to contend with arguments on the left. It’s a no-win situation.
  3. While most companies realize the centrality of employees in almost every aspect of business, few have done enough to retain the best talent. In an environment where the employee holds the keys to success, why are we still more focused on only the financial aspects of business rather than what it really takes to retain the best talent (like paid sick leave, which was central to the railway strike)?
  4. Elon Musk will fail at Twitter. He really does not understand the power of the platform, or of communication in general.
  5. Companies will continue to have problems justifying ESG while simultaneously doing business in China, given that country’s human rights record, communist orientation, and lack of interest in free speech.
Sharmistha Sikdar

Sharmistha Sikdar

Assistant Professor of Business Administration

Areas of expertise

Predictive Analytics

Prediction

Predictive analytics, which helps firms forecast patterns and trends, will play a key role in driving data-informed business decisions in 2023 and beyond. In the late 1990s and early aughts, predictive analytics was used mainly by big corporations that could afford to build in-house analytics departments. Since then, the number of firms using data analytics has increased substantially. According to one market research report, more than 95 percent of firms today have invested in data analytics capabilities.

Predictive analytics have been used to drive customer-centric decisions in banking and financial services, e-commerce and retail, healthcare, and insurance. For instance, firms can use predictive models to answer questions such as, how likely is a customer to default on a loan; or how likely is a customer to respond to a marketing campaign; or how likely is a customer to abandon or stop using a firm’s services.

Artificial intelligence and machine learning are now growing buzzwords in the industry, but at the heart of these methods is the underlying objective to improve predictive ability. The analytics industry in its formative stages mostly relied on statistical methods that used data structured into columns. In recent years, the data available to firms has increased both in volume and complexity—from the structured to the unstructured (e.g., textual data, audio, or video files), and with a high degree of dimensionality (i.e., a large number of variables for analysis).

As firms have moved beyond traditional offline formats to multiple distribution and communication channels with significant digital presence, unstructured data is readily available through online consumer reviews and social media posts.

These newer data formats coupled with the objective of improved prediction have necessitated the use of more sophisticated models. Now, free and open-source programming languages like R and Python are equipped with easy to deploy pre-configured canned packages.

In short, now more than ever before, businesses big or small can reap the power and benefits of predictive analytics and make improved business decisions. As we move forward, businesses should strive to combine the art of business judgment with the science of predictive modeling for data-informed growth.

Espen Eckbo

Espen Eckbo

Tuck Centennial Chair of Finance

Areas of expertise

Investor Activism

Prediction

The century-old political debate over what constitutes the ‘best’ objective of corporate board-decisions—maximizing shareholder value versus maximizing stakeholder interests more broadly—will again take center stage, this time through the lens of environmental, social, and governance (ESG) policies. Of course, “rising water lifts all boats” or, as The Friedman doctrine was expressed in the New York Times in 1970: “The Social Responsibility of Business is to Increase its Profits.” By that impeccable logic, shareholders who prefer to use the firm’s profits to fund social objectives and other constituencies can do so if they wish.

The controversy of 2023 concerns whether one may go further and demand that shareholders fund social objectives when this private supply of public goods (ESG) cannot be expected to yield the required risk-adjusted return on invested capital. The problem here is, who’s going to make this decision? The management of large institutional investors such as BlackRock, Norway’s $1+ trillion Sovereign Wealth Fund, or large pension funds, none of which seriously survey the opinions of their owners? The board of directors in firms with widely dispersed ownership who may not even agree on the relevant definition of a “stakeholder’’?  Firms who may express support of ESG objectives but who have no real intention of following through (“greenwashing”) or, even more important, with no comparative advantage in supplying the public goods in question?

In 2023, the most powerful force in this raging debate will be the influence of social media. On the positive side, it will make it possible for anyone, including shareholders, to make their opinions heard. This will allow firms to collect and channel shareholder opinions to a greater extent, including promoting shareholder voting through electronic annual meetings. Another possible trend is the use of the corporate charter itself, such as that of “B-Corps,” which explicitly allows the board to make certain stakeholder-oriented investment decisions. At least, with this type of charter-commitment up front, investors who decide to fund the company know what they can expect in terms of the firm’s private supply of public goods.

Matthew J. Slaughter

Matthew J. Slaughter

Paul Danos Dean of Tuck; Earl C. Daum 1924 Professor of International Business

Areas of expertise

Economic Innovation

Prediction

The following prediction was originally published by the Economic Innovation Group.

To paraphrase Mark Twain, the death of globalization in general—and of global supply chains in particular—has been greatly exaggerated. For so many countries and companies, the pandemic simply underscored that the gains from global engagement come not just from efficiency but from resiliency as well.

In the new year, nations and firms will continue to reassess what balance of global connections make best sense. Beyond that, here is a prediction and a hope.

The prediction is that global flows of data and ideas will continue to expand apace. As was recently reported by the McKinsey Global Institute, in the pre-pandemic decade, global flows of services, international students, and intellectual property grew nearly twice as fast as global flows of goods—while global flows of data exploded at nearly 50 percent per year. All this global flow of information, embodied in people and also through the internet, still holds the potential for great gains.

The hope is that the United States once again reasserts leadership in global economic policy. This does not mean rolling over or trying to win popularity contests. It means working constructively with like-minded countries who share a commitment to open and rules-based markets—and working within the multilateral forums that the United States helped build generations ago and from which we have benefitted so greatly. America’s drift towards protectionism and industrial policy harms not just itself but the overall world. The pandemic has done enough harm. Policy and political leadership can and should help us all move past it.

Vijay Govindarajan

Vijay Govindarajan

Coxe Distinguished Professor of Management

Areas of expertise

Innovation

Prediction

In the past, digital giants like Google, Amazon, and Netflix disrupted asset-light industries like music, movies, photography, and travel. In 2023, I expect digital natives will disrupt asset-heavy industries such as agriculture, infrastructure, mining, machinery-making, manufacturing, oil and gas, power, steel, textile production, and transportation.