It's no secret that information technology and globalization have radically altered the business landscape. These days, the speed and severity of change are nothing short of remarkable. Over the last few years, however, organizations have also confronted another sobering reality: the severe economic downturn that has gripped much of the world has created an entirely different framework.

"For many people, there has been a fundamental change in their perspective on society and business," observes Paul Rangecroft, CEO, Aon Hewitt Consulting, Canada. "They feel that high levels of business growth and full employment aren't going to be returning anytime soon. Moving forward, this change in mindset will create a very different environment that will have significant implications for how those businesses operate."

It has been labeled the "new normal." The term exploded into public consciousness in 2009 after Pimco founder and managing director William Gross used the words in a letter to investors. Since then, it has emerged as a focal point for organizations attempting to navigate the Great Recession. How profound and permanent these changes will be, nobody knows, of course. But for now it's clear that organizations must adjust and adapt. "It impacts how businesses make decisions," explains Kathleen M. Burns, CEO, Aon eSolutions.

Coping with business unusual

It doesn't take mountains of statistical data and an endless array of anecdotes to understand that the current economic downturn—and its impact on business—was fundamentally different from previous recessions. As Ian Davis, former worldwide managing director of McKinsey & Company, notes, "We are experiencing not merely another turn of the business cycle, but a restructuring of the economic order. When we finally enter into the post-crisis period, the business and economic context will not have returned to its pre-crisis state."

There's no question, too, that this disruption is more than the result of the Great Recession. Technology and innovation have resulted in markedly different ways of conducting business, including outsourcing, offshoring, direct business models, and instant availability of pricing data for customers and competitors. In addition, the workforce is growing older and shifts in cultural attitudes, particularly surrounding pensions and retirement, are driving notable changes.

The bottom line on the front lines of business? Business leaders face greater stress and pressure, they must rethink processes and procedures, and they must fashion a more agile and flexible organization. Says Laurie Champion, managing director, Aon Global Risk Consulting: "There is less forgiveness for perceived mistakes. There is less willingness among the public to overlook things, whether it's a recall or a natural disaster that's caused by a company." What's more, regulators, shareholders and government entities are scrutinizing businesses like never before.

In addition, and partly because of overextended credit, many organizations wound up operating in an environment rife with dubious business models, questionable business practices, misaligned incentives, lax oversight and outright fraud.

Consider it no surprise, then, that more stringent regulation will be the norm in the new normal world. A spate of regulations and stricter controls will force businesses to reexamine everything from business processes to IT systems, along with the data stored within them. Not since the 1930s—in the post-Depression era of U.S. President Franklin D. Roosevelt—has government expanded its role so dramatically. For multinational companies, regulation requirements across countries are likely to present additional hurdles.

Aon's Champion says that boards of directors also must take heed and manage opportunities and risks in a more proactive and transparent manner. "Anything less than honesty and truth will create significant problems," she says. "The public perception is that people are owed information." What's more, the window of opportunity for disseminating information has shrunk to near zero. Organizations that do not act quickly and proactively leave the information dispersal task to others, including Internet bloggers.