[Key takeaways]
- Generative AI and marketing strategies like hyperpersonalization will present opportunities and risks. SMBs must perform due diligence, establish data security and governance policies and guardrails prior to implementation.
- In a tough labor market, skills-based hiring will continue to transform hiring and training and development practices.
- SMBs cannot ignore ESG disclosures and frameworks, especially those who do business with larger enterprises.
Despite volatile market conditions, small and mid-market businesses (SMBs) are optimistic about the year ahead. However, headwinds, including high inflation, rising costs, labor shortages, and other factors will continue to impact revenues.
As we head into 2024, SMBs must also navigate emerging technologies, such as artificial intelligence (AI), regulatory, ESG, and other supply chain and operational issues.
Let’s take a deeper dive into these and other business trends that will influence 2024, plus tips for navigating them.
Generative AI: Opportunities and risks
Generative AI enables SMBs to leverage technology to enhance operations, improve customer experiences, and gain a competitive edge. Despite the excitement, businesses must perform due diligence and select tools that don’t put confidential data at risk. For instance, poor security controls can publicly expose company trade secrets, customer data, and more. Indeed, SMBs are known to be a lucrative target for threat actors since their organizations are less protected against advanced cyber threats than their larger counterparts.
Other business risks associated with generative AI are plagiarism, copyright infringement, misinformation, and harmful content.
When assessing generative AI tools, IT and analytics leaders must perform security, data governance, privacy, and vendor compliance reviews. Prior to any implementation, they must also prioritize data strategy and data management policies and procedures, and establish robust cybersecurity guardrails
Hyperpersonalization
SMBs are seeking ways to improve customer experiences and optimize their marketing strategies to be more targeted, digital, precise, and highly personalized.
Hyperpersonalization promises to meet these customer needs, operating at a scale and accuracy unmatched by traditional segmentation techniques.
Hyperpersonalization harnesses customer data and insights to deliver tailor-made interactions that align with individual preferences and interests. Thanks to machine learning and generative AI, it’s becoming easier to extract insights from vast data troves in any format, including social media, emails, chat transcripts, and more.
However, while customers desire personalized experiences, they simultaneously demand their data is kept private and secure. As data-driven engagements become essential for effective customer experiences, customers are growing increasingly wary of the use of their data. For this reason, providing personalized experiences mandates a delicate balance between using data to enhance the experience and not being overly intrusive.
Businesses must also be vigilant about new and existing laws governing data privacy and protection.
Skills-based hiring
The disconnect between the skills employers need and the skills that employees can provide has resulted in an increased focus on skills-based hiring.
Skills-based hiring prioritizes a candidate’s competencies over more historically accepted qualifications, such as college degrees. When the labor market is historically tight and there are persistent talent shortages in numerous sectors of the economy, this hiring strategy can remove barriers that currently screen out qualified job candidates and bring a broader range of perspectives and skills into the workforce.
The importance of ensuring worker satisfaction beyond adequate remuneration is also being recognized by SMBs. Personal growth and development are included here, as well as work/life balance, wellness, and intellectual challenge.
The world of work has evolved rapidly over the last two years, and employers have had to constantly adapt to remain competitive. It has forced them to rethink HR fundamentals and overcome unexpected obstacles, including the effect of inflation on wages and hybrid workplaces. These trends look set to continue in 2024.
Navigating ESG
ESG frameworks and disclosures are increasingly mandated by governments around the world.
This pressure is primarily felt by large companies, but it may also affect smaller companies that provide services and products to these corporations.
The reason for this is that large corporations covered by corporate reporting frameworks will necessitate data from the firms within their value chain to ensure compliance with current regulations. Consequently, although SMBs may not have a formal obligation to report data, they will be pressured to do so by large buyers of their products and services.
Furthermore, the integrity of a company's supply chain has never been more important. Governments, investors, and clients are increasingly requiring businesses to choose suppliers based on ESG criteria. Among these factors are avoiding suppliers who use unsustainable shipping methods, manufacture products in an environmentally destructive manner, and violate human rights.
However, ESG has also been facing a growing backlash. Many businesses have been negatively affected by restrictive local and state laws, as well as a far-right consumer movement.
Despite this, there are still powerful business reasons to focus on ESG issues. In fact, companies cannot afford to ignore ESG issues, especially with the SEC's upcoming climate regulations and the EU's Corporate Sustainability Reporting Directive affecting 3,000 U.S. companies.
