Business trends in 2024: what’s in store this year?

While the business world seems more unpredictable than ever, with global economic worries, communities broken through two wars and the environment under threat from climate change, the year ahead is starting to come into focus. What lies ahead? Some of our experts at London Business School consider what’s to come and how we might make sense of this next chapter in these uncertain times.

AI will make a profound impact on the way we conduct business

Nicos Savva, Professor of Management Science and Operations

Last year was, without a doubt, the year of generative AI. New Large Language Models, such as ChatGPT, and image generation models like MidJourney, took the world by storm. In 2024, we can expect the trend of these models becoming increasingly capable to continue. More importantly, I believe this will be the year when generative AI starts making a profound impact on the way we conduct business.

Catalysed by ever-improving model performance, including the ability of models to utilise external tools, reduced usage costs, and advancements in addressing data security and privacy concerns, we will witness an explosion of applications. A zoo of 'co-pilots' is already in the works. These will be fine-tuned instances of generative AI, tailored to provide support in specific knowledge-based domains of work, ranging from architecture and accounting to medicine, law, and academia. These co-pilots, varying in quality and usefulness, may initially pose challenges in value assessment and adoption decisions, but market forces will soon sort this out.

Furthermore, I expect business processes to begin adapting to better integrate generative AI. This includes everything from customer service centres rewriting service provision protocols to back-office operations, such as contract monitoring being redesigned to reduce or eliminate reliance on human labour. In education, online classrooms will customise teaching experiences for each student based on their performance and prior knowledge. This development of alternative ways of working will arguably enable generative AI to reach its true potential and have an effect as profound as the technology itself.

Moreover, 2024 will likely see a shift in the narrative, from AI as a replacement for human labour to AI as an enabler of human potential. The synergy between human intelligence and AI's capabilities will be crucial in maximising these technologies' benefits for the betterment of humanity.

Businesses should keep their antennas attuned to systemic and geo-economic risks

Linda Yueh, Adjunct Professor of Economics

As global economic growth decelerates to 2.9% while inflation won’t return to 2% until 2025, according to the International Monetary Fund’s latest forecasts, it seems that 2024 will be a challenging year since interest rates are likely to remain ‘restrictive’ at least in the first part of the year that will elevate risks associated with debt. But, that’s not the only source of risk, 2024 is also the biggest year for elections in history. More than half of the world’s population, over 4 billion people, will go to the polls, such as in the US, EU, UK, India, Taiwan, among many others including Africa. The elections could add to geo-economic risk, which refers to economics being affected by geo-politics, since these elections could result in re-alignments of foreign policies that in turn impact economic policies.

The Financial Stability Board (FSB), the global body that monitors systemic risk in international financial markets, has pointed out that nearly half of global assets ($239.3 trillion) are now found in the shadow banking sector, which is broader than but includes private credit. Formally known as the non-bank financial institutions, this sector is less closely regulated than banks, which is why the FSB and major central banks have expressed concerns that shadow banks could pose a systemic risk to the global economy. 

A case in point is China, whereby its trust industry, part of shadow banking, has experienced contagion from the property sector’s woes. The trust industry, worth about $3 trillion in a narrow definition, has recently seen two major trusts fail to make payments they owe to investors due to their significant exposure to the property market. The property crisis is spilling over from banks to shadow banks, which increases the chances of a systemic crisis in the world’s second largest economy and a major engine of global growth. 

Additionally, 2024 could see re-alignment of geo-politics which could result in policy shifts, including that of the US but also by other countries toward the US or China or away from both toward the non-aligned camp. For instance, the impact on supply chains could be significant. Businesses have already been reconfiguring their global value chains to avoid trade and investment restrictions as well as respond to technological change and consumer preferences. This uncertainty will be heightened in 2024, which could delay much needed investments in a sluggish world economy.

In summary, businesses should keep their antennas attuned to systemic and geo-economic risks. But, they should also bear in mind the importance of positioning themselves for the eventual upturn.

Expect a stabilisation and a gradual return of consumer confidence

Julian Birkinshaw, Vice Dean; Professor of Strategy and Entrepreneurship

2023 was a difficult year for business, with a flat economy, inflation at a 30-year high, and massive geopolitical uncertainty. Across the developed world consumer confidence is low and the investment environment is unpredictable. Looking into 2024, business leaders are therefore taking a cautious view, with most companies holding back on hiring and capital investment.

What’s going to happen in 2024? It's entirely possible there will be further nasty shocks. But the optimist in me is expecting a stabilisation of the geopolitical situation, a bottoming-out of the economic cycle and a gradual return of consumer confidence. Inflation is under control again, jobs are being created (especially in the US), and governments are seeking to stimulate investment.

I wrote a short piece this time last year, arguing that we had reached the end of the “cycle of disruption” wrought by crazy entrepreneurs (Elon Musk, Masa Son, Adam Neumann, Sam Bankman Fried) and populist politicians (you know who). I was half-correct, in that today’s politicians and business people seem content to play within the rules once more, but it's clear that the threat of disruption hasn’t gone away. Populists have been elected in Italy, Argentina and Holland. Trump is riding high in the polls.

Turning to some more specific trends, 2023 was the year of Generative AI, with many observers predicting that the business world would never be the same again. I think this is nonsense. Generative AI is a cool productivity-enhancer, and it will have a profound long-term impact on how we access and process information. But it won’t be as disruptive as the Internet or smartphone. For most companies it will be what we call a “sustaining innovation” – it will reinforce rather than undermine their competitive position. This will start to become clear in 2024.

Sustainability was high on the corporate agenda in 2023 and will continue to be in 2024. Through a combination of consumer and social pressure, new reporting standards, and government regulation, there is huge pressure on CEOs to turn their sustainability pledges into action. 2023 was the first time investment in renewable energy ($1.1 trillion) exceeded the amount spent on carbon-based energy. Several major industries, including energy and automobiles, have arguably reached the tipping point in their push for sustainable ways forward.

My final prediction for 2024. The workplace revolution is in full swing, and we can expect more companies to experiment with four-day weeks, creative employment models, and hybrid work patterns. For their part, individuals will be looking for more fulfilling work and for opportunities to make career shifts all the way through. The opportunity to turn ‘lifelong learning’ from aspiration to reality may finally be with us. 

Regulations and taxes linked to climate change will drastically change the business landscape

Marcel Olbert, Assistant Professor of Accounting

Businesses are gearing up for a transformative year as climate risk takes center stage. Companies are acknowledging the urgent need to adapt to environmental challenges – either because they face financially material environmental risks themselves or because current and future regulation will significantly impact their businesss. The Carbon Border Adjustment Mechanism (CBAM) in Europe is designed to combat carbon leakage. It imposes carbon costs on certain imports, compelling businesses to account for their carbon footprint. As this regulation unfolds, businesses will be compelled to reassess their supply chains and operational strategies.

A seismic shift towards transparency is underway, with businesses of all sizes and industries bracing for greater scrutiny on sustainability practices. The EU's Corporate Sustainability Reporting Directive (CSRD) comes into effect in 2024 -- it will amplify the trend for all businesses operating in Europe (except for small firms with less than 250 employees and €20 million in assets or revenue) to extend reporting obligations beyond publicly listed giants, impacting businesses across industries and mandating, for example, an accurate measuring of a businesses carbon footprint worldwide. Companies will need to integrate sustainability considerations into their core strategies, not only to comply with regulations but to meet the rising expectations of an environmentally conscious public.

Beyond regulatory frameworks, stakeholders, from investors to consumers, are increasingly emphasising sustainability outcomes. The concern of greenwashing looms, pushing businesses to communicate and disclose their sustainability strategies transparently. Our recent research at London Business School highlights the surge in ESG disclosures within the private equity sector. Our findings underscore a compelling link – private equity firms voluntarily disclosing more about ESG strategies achieve superior sustainability outcomes. This signals a broader trend where businesses, even in fairly unregulated sectors, will likely be better off prioritising authentic communication and action on sustainability to meet the expectations of discerning stakeholders.

As geopolitical crises and climate change strain government finances, businesses find themselves at the intersection of policy evolution. Governments, grappling with fiscal challenges, have to strike a delicate balance between raising tax revenues and fostering a competitive business landscape. The year 2024 is poised to witness dynamic shifts in tax policies as several elections loom globally, potentially bringing new leadership advocating for both higher and lower business taxes and tax incentives that impact businesses.

Adding to this complexity is the ongoing implementation of the OECD's historic global tax reform featuring a 15% minimum tax. This reform, targeting multinational firms with revenues exceeding €750 million, is already finding its way into domestic laws. The landscape of corporate taxation is undergoing a paradigm shift, demanding businesses to recalibrate their financial strategies. The impact will be profound, transcending borders and reshaping the dynamics of corporate financial citizenship. 

Re-evaluating our working habits will help both employees and employers

John Dore is the Programme Director of London Business School’s flagship executive education course, The Senior Executive Programme (SEP)

As we look towards 2024, it seems that a much gloomier landscape awaits us – with ongoing wars, instability, discord, and epoch marking elections looming in the UK, Europe and USA.

Numerous writers and counsellors advocate a digital detox, new deep-work habits, changing the channel, avoiding social media and being more aware of its impact on our mood and our sense-making. Maybe we need more walking, talking and listening to one another? More time spent reading and less social-media feeding.

Fully immersing ourselves in a time management horizon that has real breadth and meaning, not just the next impending milestone, might be the answer. It might feel more possible to do that at the start of a new year, but we need to be armed with more than just some new resolutions. We often explore this in classes at LBS, the profundity found in Andrew Scott and Lynda Gratton’s The Hundred Year Life, and the need for managers and mid-lifers to learn again, to re-invest in “intangible assets” (dormant friendships, new relationships) as well as monitoring our health and our tangible wealth.

A good touchstone for this new more optimistic way of looking at the world in 2024, might be through reappraising how we look at our working lives. Before 2019, working from home was a rare privilege, which often needed to be grudgingly “approved”. Employers were reluctant to unleash the autonomy genie of flexible working. Now, hybrid, remote and flexible working is the norm for very many employees.

But despite this, no one seems very happy. Gallop reports worsening employee engagement, and productivity measures have seen no beneficial ‘uptick’ in our newfound freedom from the commute. Surprisingly, Gallop’s 2023 State of The Workplace survey found that the category of worker with the greatest likelihood to quit their job are those who seemingly enjoy the best of both worlds - hybrid workers. It seems organisations have created a new mode of working, at the expense of some organisational glue.