Let’s look ahead to the burning business transformation issues of 2026 and how best to navigate the choppy waters!
Why eight rather than 10? Eight is considered a lucky number, especially in Chinese culture, because its pronunciation (ba) sounds like the word for prosperity or wealth (fa), symbolizing fortune, success, and high status.
1. Potential stock market correction
With the massive overvaluation of major tech/artificial intelligence (AI) stocks, bigger than even the most optimistic forecast of future profits, there could well be a correction. It may not hit until 2027, because these take longer than we expect – just look back at previous examples.
As always (think railways, electricity, the internet, mortgage-backed securities et al) a ‘correction’ does not mean that the technology does not have genuine long-term value, but the market corrections of overvaluation have big and broad economic impact. The blast radius is always bigger than the participants in the bubble itself – who usually exit early, as is already happening.
2. Cost of living remains a challenge
Despite reductions in the rate of inflation in most countries, consumer prices remain high – much higher in relation to average earnings than is healthy. This has far-reaching implications for all businesses (and governments). If the cost of living relative to earnings is higher than historically, consumers have no choice but to cut back. This flows through to all businesses, whether directly serving the consumer or further up the economic value chain.
The message to business is that transformation is not just a lofty goal, but possibly an existential mandate. We need to be able to serve customers to ever higher levels and more efficiently to remain in the game, which means driving operational efficiencies everywhere.
3. Continued geopolitical upheavals
Wars, ceasefires, peace, spheres of influence, trade, defense, Europe, Americas, China, Asia, strategic alliances…in a volatile world, things change fast. We can’t predict 2026 geopolitically, except recognize that 2025 was bumpy (to say the least) and it is likely to continue. We can see how it affects humanity and society. How does it affect business? Consumer sentiment, geographical markets, supply chains, and tariffs all play out from this.
On a more optimistic note, the next five pointers do offer more hope and opportunity!
4. Root and branch business outcomes
Technology is an amazing multiplier, but it is just that. This year will see a greater realization of the need to focus on the roots, the foundations of business outcomes and business value. After ‘why do we do what we do?’ and ‘how do we create business value’ comes the end-to-end business processes that deliver these outcomes. We need to focus more on them than the workflows or silos that individual functions operate within.
There is already a growing tide of realization and reaction here. “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” This quote from Bill Gates remains as relevant and insightful today as it was 10 years ago.
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5. Dawning realization – probabilistic versus deterministic
The prevailing mantra of the last few years has been that AI will automate repetitive, manual tasks. That is just plain misleading and wrong. AI is a probabilistic approach and, as software, is incredibly powerful in that. However, it is focused on a different problem type, augmenting and enhancing human expertise and decision-making, taking perspectives and creating statistical predictions from a large of body of data.
2026 is the year when we wake up to the fake news that AI will replace all software. It is largely best applied to problems where deterministic software has never been applied, for good reason. There is also still a large white space of untapped opportunity for deterministic software to support the redesigned efficient operations referred to above.
6. True digital transformation
We have been seduced and somewhat hypnotized by the power of technology, whether it is next generation ERP, robotic process automation (RPA), AI, large language models (LLMs), data platforms, etc. Now we have an economic imperative to transform our businesses to deliver greater customer value for less cost, whether B2C or B2B businesses.
This year should see an increasing wave of realization and action to drive transformations that improve the bottom line, not just vanity projects. Understanding and aligning on the opportunities and challenges of end-to-end processes is the key ingredient here. There is immense, untapped value in optimizing the efficient operation of our processes before we apply technology to further streamline.
7. Data as a foundation
If end-to-end processes are the land on which we build, then we know that data is a core foundation. Whilst data is a critical element, the architectural cornerstone of our transformation is master data, which drives and fuels all of our business activities and systems, and whose value is asymmetric to its apparent scale. Master data ‘get clean, stay clean’ plus governance will be a big theme for 2026, because so much else depends on it.
8. Skills versus mindsets
We talk a lot about skills and capabilities required in our new world of ever accelerating pace, but skills can be acquired and developed. The critical focus for 2026 is to encourage, acquire, and develop the mindsets for success – namely the mindset of curiosity, balanced with a bias for action and urgency, plus empathy/EQ, balanced with determination and resilience.
The ability to zoom out and take a helicopter view of large, complex concepts (such as end-to-end processes), balanced with an ability to zoom in to understand the devil in the detail. These are the traits that power and reward great careers and are the fuel of highly successful teams and organizations.