In the Final Analysis - SAS Executive Vice President Mikael Hagstrom on the challenges facing global leaders today

We’re hearing a lot about the new economy and that today’s changed and challenged world is the “new normal.” I like that term because it isn’t just a buzzword, but a description of what many CEOs are facing. Companies around the globe are re-examining everything from their people and processes to their organizations’ core raison d'etre. One of the components of the new normal is letting go of the old normal. For example, in the media and communication industry, leaders are looking at new ways to measure performance. The new Coalition for Innovative Media Measurement “includes 14 companies … making a multi-year commitment to establish a new data research system.”

Companies are also seeking to find new profits by re-packaging existing products. In the financial services sector, an interesting example of this is with the so-called “securitized death bonds,” which will force insurers to adapt their products, or increase their risk levels above Solvency II thresholds. The idea has been around for a few years, but it’s starting to get some traction on Wall Street.

For the private sector, the key to survival is in creating – and sustaining – profitability. Twitter is facing this challenge right now; they have customers (51 million visitors in July 2009, up 16 percent from June), but their model is not profitable enough for its investors. So they are looking for ways to show value in their offerings and then create a successful mechanism for converting that perceived value into bottom-line cash.

There are many other examples of how the new normal is affecting organizations around the world. If you are aware of some new and innovative approaches, please join the discussion. Together, we are in unprecedented and exciting times – let’s welcome the new, look forward and embrace the journey.

Ten years ago, organizations were focusing their attention – and resources – on one important thing: Y2K. Workers around the world pored over legacy systems that were written decades before by programmers who were long retired or deceased. Leaders didn’t really know what would happen when the date changed at the stroke of midnight on December 31, 1999 – but they knew that the world would either be exactly the same or entirely different.

And now, a decade later, organizations are facing the exact opposite dilemma: the entire world has changed, and they must focus their attention – and resources – on transforming their organizations so that they can continue to generate value, be relevant to customers (or constituents) and meet the strategic goals of their stakeholders. As with Y2K, the path to success is found within their own IT systems and data.

For example, the Philippines Bureau of Internal Revenue was able to analyze their own data to uncover about PHP 70 billion (US$1.4 billion) in under-declarations and to collect PHP 6 billion (US$114 million) in the first year alone. Not only did they realize a 400 percent return on investment, their CIO and Deputy Commissioner stated that they “revolutionized [the Philippines] tax system.” And in Sweden, public administrators of its universal healthcare are using analytics to transform the way they work with a number of stakeholders, including providers, politicians and officials, healthcare and social service payers, and – most importantly – patients.

I’ve seen many, many success stories like these, around the globe and across industry sectors. Organizations are moving from a time of standardization and automation (and the systems to support that) – to a time of innovation and optimization (and the systems that support that). As we move toward 2010 – or Y2.01K – I believe that we will continue to see this trend.

In the final analysis, the leaders in 1999 and 2009 have one important thing in common: to succeed, organizations must continuously transform themselves to deliver value, maintain relevance, and meet/exceed shareholder expectations.