Firms with a digital focus perform better than others, which is why the digital wave is one of five trends that will define the successful enterprises of tomorrow, according to a new CA ANZ survey of business leaders.
- Technological change is the most important megatrend identified by 1500 business leaders in a trans-Tasman survey
- Defining your business model is the first step towards digital transformation, which can lead to higher revenue
- Social responsibility is also being taken much more seriously by customers, staff and investors
By Alexandra Johnson.
The business world is changing rapidly. Businesses are facing unprecedented levels of uncertainty and competition because of a myriad of factors, from climate change and technology to community expectations.
Chartered Accountants Australia and New Zealand (CA ANZ) conducted a trans-Tasman survey of more than 1500 business leaders to understand their aspirations, views on the future, and how they anticipate and respond to challenges and opportunities.
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Here are five trends identified by the report that define business of the future and what successful enterprises will look like.
1.Digital transformation boosts revenue
Businesses nominate technological change as the most important of the megatrends. Across a range of metrics, digitally advanced businesses perform better, with the benefits including more revenue and increased engagement with customers.
Digitally engaged small businesses perform better financially, according to Deloitte Access Economics. In 2017, small-to-medium sized businesses with advanced levels of digital engagement were 50% more likely to be growing their revenue, and they earned 60% more revenue per employee relative to businesses with lower levels of digital engagement.
In the CA ANZ survey, more than four in every five (86%) businesses say they already use at least one digital tool to engage with their customers – such as email, social media, blogs or search engines – up from 77% five years ago.
But how do you embark on a digital business transformation to fully take advantage of market opportunities? One Big Four bank that is investing heavily in digital and technology staff is NAB. It is creating up to 2000 jobs by 2020, most of which are in the technology and digital areas, as part of a A$4.5 billion digital transformation.
Sydney-based Mark Nielsen, CEO of Talent, a leading technology and digital recruitment agency, says that in general terms, investment in digital assets and talent is hugely important.
“Often a digital transformation is the largest project a business will undertake, therefore engaging people who have done this before will save a significant amount of money and greatly improve the chances of success.”
But he sounds a note of caution, adding that many businesses can make the mistake of building out technology before constructing their business model.
He says the first step is to engage a business analyst to define the business model, “and understand the key drivers and how you are going to ultimately add value from a monetisation point of view. Once you’ve done that – the business analyst can do the process flows – what is my current system and what is it going to look like afterwards?”
From there, the right technology and experts can be selected to help leverage and scale a business. Nielsen says many transformations are driven by the increasing use of mobile devices. “Now people want everything mobile driven, and for that there are niche skills required such as UR and UX developers to make sure the interface between users is exactly what they are after.”
Nielsen says Talent has just launched an innovative digital platform, Talent Engage, which revolutionises communications in the recruitment industry. It streamlines payroll processes, allows employers to contact their ideal contractors and offers professional development. “There is also a rewards program and a whole interface where contractors can be part of a community, effectively like a live hub.”
2. Social responsibility is the new normal
According to the CA ANZ report, 87% of businesses are involved in at least one action to build their social responsibility profile, and in five years’ time, this is expected to grow to 94%.
Karen McWilliams, CA ANZ Ethics and Sustainability Leader, says social responsibility is becoming an expectation from both customers and employees. “There is a change in public perception that businesses can’t just make big dollars at the expense of everything else.”
In the past, while impacts on the wider environment were not being appropriately priced and were therefore not being taken into the decision-making process, things are now shifting.
While millennials are certainly part of this push, larger organisations are also starting to think long term, “so they are still giving value back to shareholders and customers in 10 years’ time”.
Additionally, there is a lot more focus now on how organisations maintain their brand and reputation. “Social media and our 24-hour news cycle mean that businesses need to be more responsive. Disgruntled voices have far more clout than they used to.”
3. Fast thinkers are top performers
Businesses need to also prioritise agility and adaptability – not just in products and processes, but in business models, too.
A recent McKinsey survey of 165 companies around the world found that the most agile organisations are also the most healthy and profitable. This was confirmed in the CA ANZ survey, as 55% of businesses that reported above average agility also had above-average revenue growth. But in practical terms, how is agility achieved? The report defines five qualities successful businesses need, including leanness and responsiveness to the changing environment.
4. Plan now for the changing face of work
Most business heads still expect that more than 80% of their workforces are traditional employees and do not yet predict an increase in the use of contractors or robotic workers.
But as this and many other reports suggest, sweeping changes to employment are on the horizon, with the rise of part-time workers, collaborative platforms, and estimates that automation will change the nature of more than 60% of jobs.
The report recommends that businesses consider other ways to employ people and use technology to be competitive and efficient. “Businesses that have not yet considered and planned for the changing face of work could face a significant transition,” the report says.
5. Location, location
While many global challenges are affecting businesses, one of the greatest concerns in Australia and New Zealand for both large and small businesses is the level of government regulation and compliance.
However, Australia and New Zealand still appear to be favourable locations for doing business. New Zealand ranks first in the world in the World Bank’s Ease of Doing Business index and Australia ranks 14th out of 190 countries. In particular, starting a business, dealing with construction permits and getting credit are simpler in both Australia and New Zealand than in most other countries.
“…realistically, the business environment in Australia and New Zealand is in good shape by global standards,” the report points out.
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Alexandra Johnson is a freelance writer based in Wellington.